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Question 1(AD-AS): Assume the structure of the demand side of the economy can be summarized in the following equations: C = Ca + 0.75(Y - T); Ca = 200; T = 400; Ip = 1,650 - 50r; G = 450; and Ma = 0.25Y - 50r + 2000; MY = 500 The supply side can be summarized in the following equations: Production function: Y = 40N0.5 The nominal wage that workers demand will not be as flexible as in the neoclassical case. However, it will follow the change of P. The relationship between price P and real wage W can be written as W = 10p0.5 a) Derive the AD Curve, (2) b) Derive the AS Curve. (2) c) Calculate the equilibrium Y and P in the AD-AS model. (2) d) Suppose the FED increase My by 1500, calculate the new equilibrium Y and P in the AD-AS model. (2) e) Is the expansionary monetary in d) policy effective? (1) Why? (Hint: IS-LM, AD-AS) (3)