Question: Can you please help me step by step with this problem. thank you The solutions to this equation take the form :17 _ b:|: V132

Can you please help me step by step with this problem. thank you

The solutions to this equation take the form :17 _ b:|: V132 4a.c _ T. (25 points) Consider the following economy: 0 Desired Consumption: Cd = 250 + 0.5(Y T) 5007' . Desired Investment: I d = 150 500T . Real Money Demand: L = 051' 1000i - Billemployment output: Y = 1000 - Expected ination: are = 0 (a) Suppose that T = G = 200 and M = 1000. Give an expression for aggregate demand: For any given price level P nd the level of output such that both the goods market and the asset market is in equilibrium. (b) Assume that Short Run Aggregate Supply (SRAS) is given by Y = 1? + 100(P P3). (1) What is the expected price level such that the economy is at full employment output when l7 = 1000? (c) What will be the short run price level and output if there is an unanticipated productivity shock reducing l7 to 900? ( Hint: The SRAS moves with l7 ) (d) Depict this graphically. Draw the following curves: Aggregate Demand (label AD),Long Run Aggregate Supply when l7 = 1000 (label LRAS), Long Run Aggregate Supply when 17' = 900 (label LRAS'), Short Run Aggregate Supply when i7 = 1000 (label SRAS), and Short Run Aggregate Supply when 17' = 900 (label SRAS')

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