Question: Please provide all steps. Thank you so much Question 2 (20 marks): Consider the following economy C(YT)=a+b(YT) I(r)=cdr G=G wherea>0,0 0andd>0. (a) Solve for Y

Please provide all steps. Thank you so much

Question 2 (20 marks): Consider the following economy C(YT)=a+b(YT) I(r)=cdr G=G wherea>0,00andd>0. (a) Solve for Y as a function of r, the exogenous variables, G" and T, and the model's parameters a, b, c, and d. (3 marks) (b) How does the slope of the IS curve depend on the parameter d? Explain your intuition. (2 marks) Now suppose the demand for real money balances is a linear function of income and the interest rate, given by: L(r, Y) = eY fr where e > 0 and f > 0. (c) Solve for r as a function of Y, M, and P and the parameters 6 and f. (3 marks) (d) How does the slope of the LM curve depend on the parameters f? Explain your intuition. (2 marks) Lastly, (e) Using the answers above, derive the aggregate demand curve (Hint: This expression should show Y as a function of P, M, G, and T, and the model's parameters). (3.75 marks) (f) How do increases in G and M impact the aggregate demand curve? What about decreases in T
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