For part c), you should provide numerical values of q, rather than expressing q in terms of other variables.For part b), it would be easier if you assume "undershooting" occurs instead.

Homework 3 Due date: 14th or 15th December 2020 1. Assume that Home output Ya is endogenously determined by the goods mar ket equation. Home monty supply My increases by 10%, permanently. The real money demand function is in the form where dy is the nominal House interest rate. a) Lise a AA-DD diagram to show that undershooting could exist. b) If overshooting occurs, state the range of the possible percentage change in Ty. (that is, and out the maximum and minimum percentage changes of Val. In part of below, assume that before the money supply charge. Ye is initially at the full employment level Y'S where Y. = 1. The cunsumption and current ap count functions are, atsporticely C=C-0.7(Y-1) (21 CA= (HIP -0.0(14-7) (31 where quip is real exchange rate of Home per unit of Foreign currency, C is an autonomous consumption and 7 is a lump-stam tac.