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The production function in an economy is Y = 2(7N-0.02N2) With this production function, the marginal...

The production function in an economy is Y = 2(7N-0.02N2) With this production function, the marginal product of labor is .mpn = 14 - .08N.

Labor Supply is , N8 = 88+2w,

Desired consumption is , Cd=100+0.8Y -5020r -.5G,

Desired investment is Id=100-500r

Real money demand is Md/P = Y-2000 (r+?e)

Other variables are expected inflation ?e=.05 , government purchases G = 200, and money supply is M = 2100

1. Find the general equilibrium values of the real wage, employment, and the output.

2. For any given level of output, Y, find an equation for IS curve, i.e. write r as a function of Y.

3. For any given level of output Y and price level P, find an equation for LM curve, i.e. write r as function of Y and P.

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