1) C=0.5(Y-T)+10; I=0.25Y-50i; G=10, T=0;

2) Money demand: M-p=y-200i, (Instead of M/P, I write the demand curve in m-p to make calculation simple)

3) Money supply: M=40;

4) P=Pe+Y-40, where Pe is the expected price

a. Solve for the medium run equilibrium Output and Interest rate and Price Level

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