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Simultaneous equilibrium in the money and goods market is given by the equation Y = hk e / h+kbk e (A)+ bk e / h+kbk

Simultaneous equilibrium in the money and goods market is given by the equation

Y = hke/ h+kbke (A)+ bke/ h+kbke (M/P)

a) Find an expression which relates the change in output (y) to a change in the price level.

(Hint: The behavioral coefficients and A are held constant

b) Find the shift in aggregate demand when there is an increase in the nominal money supply, other things equal.

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