Consider the following economy:

a. Suppose that T = G = 450 and that M = 9000. Find an equation describing the IS curve. (Set desired national saving and desired investment equal, and solve for the relationship between r and Y, given P.) Finally, find an equation for the aggregate demand curve. (Use the IS and LM equations to find a relationship between F and P.) What are the equilibrium values of output, consumption, investment, the real interest rate, and the price level?
b. Suppose that T = G = 450 and that M = 4500. What is the equation for the aggregate demand curve now? What are the equilibrium values of output, consumption, investment, the real interest rate, and the price level? Assume that full-employment output F is fixed.
c. Repeat part (b) for T = G = 330 and M = 9000.

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Desired consumption 1275+0.5(Y-T-200r. Desired investment /d = 900-200r. Real money demand L=0.5Y-200i. Full-employment output P=4600. Expected inflation π._0.