We will consider a closed economy, no exports or imports. In this economy: autonomous consumption is $3 trillion, autonomous investment is $1.5 trillion, autonomous government spending is $2 trillion, taxes are $2 trillion, d= .2, mpc=.5, and f=1.5

a) Derive the IS curve

b) What is equilibrium level of output for r=4%, 5%, 3%, 1%?

c) Suppose we are at a point below the IS curve? Is the goods market in equilibrium, if not how can it reach equilbrium?

d) Suppose the MP curve is r = 2+.5(pie) derive the AD curve.