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Question 20 (5 points) Consider the following short-run closed economy IS-LM model described by equations (1) through (6): (1) C = 300 + 0.75(Y -
Question 20 (5 points) Consider the following short-run closed economy IS-LM model described by equations (1) through (6): (1) C = 300 + 0.75(Y - T); (2) T = 300 + 0.2Y ;(3) G =450; (4) 1 = 850 - 20 r ; (5) Y = C+ 1 + G; (6) M/P = 0.5Y - 50rwhere the nominal money supply M=3000 and the price level is P = 2. Equation (5) is the goods market equilibrium condition (IS equation), while equation (6) is the money market equilibrium condition (LM equation). In this economy, the aggregate demand equation is given by Yd = 4556.68 + 3000/P Yd = 3553.86 + 4000/P Yd = 1988.73 + 6000/P Yd = 2291.66 + 2000/P
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