F. Monetary expansion: Let M (nominal money supply) increase to 1840. Find equilibrium Y, i, C and I. What happens to Y, i, C and I when the Fed increases money supply through open market operations? G. Graph part f (a new graph starting from part e). H. Fiscal expansion: (Continue from part e) Let G increase to 400. Find equilibrium Y, i, C and I. What happens to equilibrium Y, i, C and I when government spending increases? 4. Problem 3, Chapter 6 of Blanchard, p. 135. 5. Problem 8, Chapter 6 of Blanchard, p. 136. The next two problems are based on material in Chapter 7: 6. Use graphs and words to explain the following: (a) How does an increase in G affect Y and P in the short run? (b) How does an increase in G affect Y, P, C and I in the medium run? (c) Show and explain how the economy adjusts from the short run to the medium run after an increase in G. (d) How does an increase in M affect the price level, consumption and investment in the medium run? 7. Consider the following
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