For the equations C = 0.8(1 – t)y, t = 0.25, I = 900 – 50i, G = 800, L = 0.25y – 62.5i, M = 500 (usual…

The aggregate demand function is $0.75y=2125+500/P$. Since $C=0.8(0.75)y=0.6y$, goods-market equilibrium gives $0.4y=1700-50i$. Money-market equilibrium gives $500/P=0.25y-62.5i$, or $50i=0.2y-400/P$. Substitution gives $0.6y=1700+400/P$; multiplying by $1.25$ yields $0.75y=2125+500/P$.