NEED HELP PLEASE...

Section A This section is compulsory Question One a) Suppose that the macro model of Kitwe economy is given as follows C= 100 + 0.75Yd Consumption function I= 250- 4i Investment function G= 150 Government spending T= 40+ 0.20Y Tax function Mts= 0.25Y Transaction demand for money Msp= -20i Speculative demand for money Ms = 1000 Nominal demand for money P= 5 Price level where Ya is disposable income, i is interest rate. Given that the economic policy makers of Kitwe economy want to estimate the following aspects and the variables of the economy: i. The equilibrium rate of interest and level of income. (3marks) ii. The fiscal multiplier. (2marks) iii. The crowding out effect of additional government spending of K50 on the equilibrium income and interest rate. (3marks) iv. The effect of increase in tax rate from 0.20Y to 0.25Y on the equilibrium income, given the increase in the government spending. (3marks) V. Increase in the real money supply (AMs) required to counter balance the crowding out effect of government expenditure. (3marks) b) Suppose that the ratio of cash holdings C to bank deposits Dis c = C / D, and the ratio of banks' reserves R to deposits is r = R/ D. Derive the money multiplier, that is, the ratio of the broad money supply M = C + D to the monetary base H = C + R. If the central bank is aiming to stabilize the broad money supply, explain how it should respond using open-market operations to an increase in the reserve-deposit ratio r. (3marks) c) Explain three causes of inflation and for each suggest possible cures (3marks) Y = 470 + 0. 97- 41 sky - 40 + 0 . 25