A numerical version of model 13.4 (table 13.4) is e = 0.8y − 0.1r + 5 + 0.01(s − p)

p˙ = 0.1(e − y)

md = p + 0.5y − 0.5r md = ms = 105 bp = 0.01(s − p) + 0.004(r − r

∗ − s˙

e

)

s˙
e = 0.2(s − s)
y = 20 r ∗ = 10 (i) Establish the following at the initial equilibrium.

(a) Equilibrium is (s,p)= (100,100).

(b) GM0: p = 95.238095 + 0.0476190s

(c) AM0: p = −440 + 5.4s (ii) Let ms rise to 110.

Find point C on AM1 and establish that for the new equilibrium dm = ds = dp.