Show work, include graphs where needed1. Desired consumption and investment areCd= 4000-4000r+0.2YId= 2400-4000rAs usual, Y is output and r is the real interest rate. Government purchases are 2000.(a) Find the equilibrium value of the real interest rate if Y =10000.(b) Find the equilibrium value of the real interest rate if Y = 10200.(c) Graph the IS curve for this economy2. In a particular economy the real money demand function isMd/P=3000+0.1Y-10000iAssume that M=6000, P=2.0, πe = 0.02(a) What real interest rate r is consistent with equilibrium in the asset market when Y = 8000?(b) What real interest rate r is consistent with equilibrium in the asset market when Y = 9000?(c) Graph the LM curve.3. An economy is described by the following equations:Desired consumption Cd = 1275 + 0.5(Y – T) – 200r. Desired investment Id = 900 – 200r. Real money demand L = 0.5Y – 200i. Full-employment output Y = 4600. Expected inflation π e = 0. Government Purchases: G = 450Taxes: T = 450Money supply M = 9000a. Write equations for the IS curve, LM curve (given P) and AD curves (Hint: Using IS curve and LM curve to get the relation between Y and P, this is AD curve).b. Calculate the equilibrium values of output, the real interest rate, the price level, consumption and investment.4. Analyze the short-run (the price level is fixed) and the long-run (general equilibrium) effects of each of the following on the level of output, the real interest rate, and the price level. Illustrate your analysis graphically in two ways: (1) in an IS-LM-FE framework, and (2) in an aggregate demand-aggregate supple framework.(a) The expected rate of inflation declines.(b) Consumers increase their desired level of consumption at each level of income and the real interest rate.

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