Consider the following economy: Desired consumption: CO = 1,275 +0.50(Y-1)-200r Desired investment: = 900 - 200r Real mo

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Consider The Following Economy Desired Consumption Co 1 275 0 50 Y 1 200r Desired Investment 900 200r Real Mo 1 (76.3 KiB) Viewed 66 times

Consider the following economy: Desired consumption: CO = 1,275 +0.50(Y-1)-200r Desired investment: = 900 - 200r Real money demand: L = 0.5Y - 200i Full-employment output: Y = 4600 Expected inflation: T = 0 Initially the levels of taxes, government purchases and money supply were, T = G = 450 and M = 9,000. Initially, the equations for the IS, LM, and the aggregate demand curves were, IS: Y = 4800 - 800.00r LM: Y = 18000 © + 400r AD: Y = 1600 + 12000 Initially, the general equilibrium values of output (Y), the price level (P), the real interest rate (1), consumption (C), and investment (1) were: Y = 4600, P = 4.00, r= 25.00%, C = 3,300.0, 1 = 850.0. Now suppose that T = G = 450, but money supply changes to M2 = 4,500. Determine the equation for the new aggregate demand curve. (First you need to derive the new IS and LM equations. Use these equations to derive the new AD equation.) Aggregate demand equation: (Enter your responses rounded to the nearest whole number.) v-1:00) Y