PLEASE SHOW ALL WORK!!!

1. Consider the following model of the economy: Production Function: Y = A . K . N- MPN = A . K - N where the initial values of A = 6 and K = 10. Labor Supply: N, = 20 + 9w The initial conditions in the goods market are as follows: C" = 100+ 5(Y -T) -500r 1= = 800 -500r G = 100 T= 100 The initial conditions in the asset market are as follows: L =78 + 0.5Y- 1000(r + n') Nominal Money supply: M = 1800 Expected inflation is equal to 2% (= = 0.02) 1 a) (6 points) Solve for the labor market clearing real wage (w*), the profit maximizing level of labor input (N*), and the full employment level of output (Y*). Please show your work. W= N* = Y* =