Suppose the central bank's monetary policy sets the interest rate according to the function:

Question 3 [6 points] Suppose the central bank's monetary policy sets the interest rate according to the function: i = 2 + 2(TT - TT ) with TT = 3, and aggregate expenditure is: AE = 40 + 0.2Y - 10i a) What is the equation for the ADT curve? Use 'PI' to represent IT when entering your equation. Y = b) Plot the ADTT curve in the graph below. Aggregate Demand 7.5- Inflation Rate (%) 4.5- w 1.5- 0 25 50 75 100 125 150 175 200 Reset Real GDP