Derive the aggregate demand curve and plot it to scale

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Reference no: EM13843348

Based on the data below, please plot the IS curve:

I = 400 - 2000R + 0.1Y

Y = C + I + G + X

C = 220 + 0.63Y

X = 525-0.1Y-500R

M = (0.1583Y - 1000R) * P

P = 1

G = 1200 (government spending)

M = 900 (money supply).

The IS curve is Y = (220 + .63Y) +( 400 - 2000R + .1Y) + G + (525 - .1Y - 500R)

Solving for R, we derive: R = 0.458 + 0.0004G - 0.000148Y

a. Plot the IS curve to scale

b. Derive the aggregate demand curve and plot it to scale

Please explain how you arrived at the plot.

Reference no: EM13843348

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