Macroeconomics Assignment If1) Monetary policy can be effective only if A) the money supply reacts to changes in the interest rate. B) planned investment reacts to changes in the interest rate. C) money demand reacts to changes in the interest rate. D) government spending reacts to changes in the interest rate an economy has the following data: (25 marks) Induced consumption = 0.5Y Autonomous Consumption = 500 MY = 0.25Y Mr = - 37.5 r YD = 0.8Y G = 700 I = 800 - 25 r MS = 500 Based on the above data, answer the following questions: (Note: Answer all points in each question, any missing point or calculation will deduct from your marks) 1. What is the tax rate and MPC (from disposable income)? 2. What is the marginal leakage rate? What is the value of MPS from aggregate income? 3. Derive the Keynesian consumption function, IS and LM equations mathematically and graphically. (Draw two separate graphs one for the consumption function and the other for the IS-LM). 4. Calculate the equilibrium values of aggregate income and interest rate in this economy. 5. Assume that, to help the economy recover from a deep recession, the government adopted