Consider the following economy: Labor supply: Nt= 90 Capital stock: Kt = 90 Government spending: Gt = 20 Tax collections: Tt = 20 Production function: Yt = 2(Kt)0.5 (Nt)0.5 Real money demand Lt = 2Yt - 200rt Consumption function: Ct = 16 + 0.8(Yd)t Domestic price level: Pt = 4 Investment function: It = 25 - 50rt Nominal money supply: Mt = 1296 Plot (a)-(d) on the IS-LM and AD-SRAS-LRAS diagrams. Make sure to label (i) the axes, (ii) the curves and (iii) the initial equilibrium levels.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Consider the following economy:

Labor supply: Nt= 90

Capital stock: Kt = 90

Government spending: Gt = 20

Tax collections: Tt = 20

Production function: Yt = 2(Kt)0.5 (Nt)0.5

Real money demand Lt = 2Yt - 200rt

Consumption function: Ct = 16 + 0.8(Yd)t

Domestic price level: Pt = 4

Investment function: It = 25 - 50rt

Nominal money supply: Mt = 1296

Plot (a)-(d) on the IS-LM and AD-SRAS-LRAS diagrams. Make sure to label (i) the axes, (ii) the curves and (iii) the initial equilibrium levels.

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