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In a particular economy, the real money demand function is: Md / P = 3000 + 0.1Y - 10,000i Assume that M = 6000, P

In a particular economy, the real money demand function is:

Md / P = 3000 + 0.1Y - 10,000i

Assume that M = 6000, P = 2.0, and e= 0.02

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)?

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