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Suppose the monetary policy curve is given by r = 1 . 5 + 0 . 7 5 , and the IS curve is given
Suppose the monetary policy curve is given by and the IS curve is given by
a Calculate an expression for the aggregate demand curve.
b Calculate the real interest rate and aggregate output when the inflation rate is and
c Draw graphs of the IS MP and curves, labeling the points from part b on the appropriate graphs.
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