If bonds demand (Bd) is P = 1100-5Q, bonds supply (Bs) is P = 500+15Q, respective interest rate i* = (F-P)/P, assume F = 1000, money demand is L = 0.8Y-62.5i and real money balance is $1500m with fixed prices. Each sub-question carries 2 marks.

(a)Determine the interest rate using bonds market equations.

(b)Show financial market dynamics in (BsBd), (MsMd) and (ISLM) spaces.

(c)If IS was Y= 2240 -120r, derive the AD function if MP rule was r = 2 +0.5

(d)Use ADAS to determine RGDP if Phillips Curve was = 10 + 0.5(Y-Y*) + , where Y* (Potential RGDP) was 1500 and (financial friction) was 2%.