question is part a) to f). Will give a thumbs up since its a long question. Thank you very much.

1. An economy is described by these equations: Equilibrium in the goods market: Y:C+I+G. where C: 10+05Y 0:0 and I = 110 6r (1" is denoted in percentage terms) Equilibrium in the money market: 31' Y : 170 8- P 3 + r where M = 180 and l7 = 200 l? is the natural (long-run) level of output. (a) {b} (e) (d) {e} Derive the aggregate demand curve of the economy. The aggregate supply curve for the economy is given by Y : l7 + QUUfP Pa) where P9 is the expected overall price level. Use the AD and AS curves to nd the value of Y and PC when P is 1. Draw the AS and AD curves to illustrate your answer. lCan the situation above be justied by an unexpected shock in consumers' opti mism or pessimism about the economy? If so. is it optimism or pessimism? Find the interest rate and total investment corresponding to the values you found in (b). If the scal authorities would like to attain 17', what will the value of government expenditure have to be {assume PE is what you found in (c) above)? Graph this scal policy action on the money market. How much will private investment be crowded out by this scal expansion? Set (3:0 again. Now if the monetary authorities would be the ones attaining l? by changing the money supply. how much will the money supply have to change? How will this policy affect interest rates and investment? Graph this monetary policy action on a AS/AD graph