Consider a closed economy described by:

$PE=C+I+G$

$C=0\mathrm{.}75(Y-T)+50$

$I=150-10r$

$(\frac{M}{P}{)}^d=Y-50r$

$G=250$

$T=200$

$1$

$M=3000$

$P=4$

A$.$ Derive the IS and LM curves. Calculate the equilibrium real interest rate and output.

B$.$ Derive the AD curve.

C$.$ Explain how economy responds to the following policy changes in the short$-$run and long$-$run using IS$-$LM and AD$-$AS graphs $($with horizontal SRAS$).$

A$.$ Expansionary fiscal policy $($increase in G$)$

B$.$ Decline in money demand