Question: a. Show graphically the relationship between the MP Curve, the IS Curve, and the Aggregate Demand Curve. Explain briefly this relationship. b. Suppose the monetary

a. Show graphically the relationship between the MP Curve, the IS Curve, and the

Aggregate Demand Curve. Explain briefly this relationship.

b. Suppose the monetary policy curve is given by r= 1.5 + .75(pi) and the IS curve

by Y=13-r.Solve for aggregate demand.

c. How do nominal interest rate create excess supply and excess demand in the

Money Market model? Explain and show graphically.

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