first picture is just a resource for the question in the second picture thank you so much! :) 3. Assume that inflation is zero, so that i = r. This economy's central bank follows agiven Monetary Policy Rule: r = i = 0.025 x Y + 0.0003 x P , where P is the pricelevel. Given this and the expression for the IS Curve, write down an expressionfor the Aggregate Demand Curve. (Hint: Remember that the AD Curve takes theform P =...) We use the following terminology in this part: aggregate income Y and disposable incomeYa (= Y –T), consumption function C(Ya), planned investment function I(r), governmentspending G, and taxation T = tY where t is the marginal tax rate; r% denotes the realinterest rate in the economy. (Note, r is in percentage points, e.g. r = 2 means the interestrate is 2%. When doing calculations, the interest rate should not simply be inserted indecimal form. For example, if r = 2 then I(2) = 124 – 2 = 122.)Consider a hypothetical economy where:• C(Ya) = 12 + 0.75 × (Y – T)• I(r) = 124 – 1 × r• G = 120• t = 20%

Where; C(Yd)= Consumption Yd= Disposable income I(r)= Investment G= Government spending t= Marginal…

3. Assume that inflation is zero, so that i = r. This economy's central bank follows a given Monetary Policy Rule: r = i = 0.025 × Y +0.0003 × P , where P is the price level. Given this and the expression for the IS Curve, write down an expression for the Aggregate Demand Curve. (Hint: Remember that the AD Curve takes the form P =....)

3. Assume that inflation is zero, so that i = r. This economy's central bank follows a given Monetary Policy Rule: r = i = 0.025 × Y +0.0003 × P , where P is the price level. Given this and the expression for the IS Curve, write down an expression for the Aggregate Demand Curve. (Hint: Remember that the AD Curve takes the form P =....)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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