Question: can you please help me step by step with this problem. thank you (25 points) Consider the country Freedonia who's economy has an aggregate demand

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

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

(25 points) Consider the country Freedonia who's economy has an aggregate demand curve given by Y = 500 + 20(M/P) The Short Run Aggregate Supply in Freed Freedonia is Y = Y + 100(P P6). Finally, assume unemployment in Fieedonia satises Okun's law Y i7 ? = _2 _ - Y (u u) (a) In recent memory, Freedonia's economy has been stagnant with output constant at its Full Employ ment level of Y = 600 and unemployment at its natural rate of 6%. If the nominal money supply has been constant at 200, what are price level and expected price level such that the economy is in general equilibrium? Assume the price level and the expected price level have been constant at these levels for a while. (b) A new government is elected into power promising to boost the economy and they appoint a new central banker. If the public anticipates the price level growing by 10% what will be the new expected price level P6? (c) If the Central Bank of FreedOnia does not increase the nominal money supply, what will be the price level, output and unemployment in the short run? (Assume P\"3 is what you found in part (b)) ((1) Assume that P8 remains the same as in (b). By how much would the Central Bank need to increase the money supply in order to reduce unemployment to 4%? What would be the ination rate? (e) What would be the ination rate and unemployment rate if the public anticipated the change in the money supply you found in part ((1)

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