Question 4. (11 points) Assume that a closed economy is characterized by the following equations: Consumption: C = 100 + (2/3) (Y -T) Tax: T = 600 Government spending: G = 500 Investment: I = 800 - (50 / 3) r Ms / P = Md / P =0.5Y - 50r, 2 where Ms = money supply, Md = money demand, r interest rate, Y= aggregate income, and P=price level. a. (2 points) Write the numerical IS curve for the economy. b. (2 points) Write the numerical LM curve for this economy. c. (3 points) Solve for the equilibrium values of Y, I, C and r, assuming P = 2.0 and M = 1,200. d. (4 points) Assuming M=1,200, derive an equation for the aggregate demand curve in this economy

Question 4. (11 points) Assume that a closed economy is characterized by the following equations: Consumption: C=100+ (2/3) (YT) Tax: T = 600 Government spending: G = 500 Investment: I 800 - (50/3) r Ms/P Md/P=0.5Y - 50r, 2 where Ms = money supply, Md = money demand, r=interest rate, Y= aggregate income, and P-price level. a. (2 points) Write the numerical IS curve for the economy. b. (2 points) Write the numerical LM curve for this economy. c. (3 points) Solve for the equilibrium values of Y, I, C and r, assuming P = 2.0 and M = 1,200. d. (4 points) Assuming M=1,200, derive an equation for the aggregate demand curve in this economy.