In a particular economy the real money demand function is

Md/P = 300 + 0.1Y - 10,000i. Assume that M = 6000, P = 2.0, and e = 0.02.

How many workers would be hired if the going salary for this quality of labor is $400 per week? If the product's price were to increase to $200 per unit, how many workers would be hired?

a. What is the real interest rate, r, that clears the asset market when Y = 8000? When Y = 9000? Graph the LM curve.

b. Repeat Part (a) for M = 6600. How does the LM curve in this case compare with the LM curve in Part (a)?

c. Use M = 6000 again and repeat Part (a) for e = 0.03. Compare the LM curve in this case with the one in Part (a).