1. In an economy system with government represented by the following identity: Y = C + I + G, where consumption is determined by the following equation: C = 0 + 1YD, investment by the following function: I = i0 - i1r, and government spending is exogenously determined, responds to the following items:

a) Determine the IS curve algebraically.

b) Explain what the slope of the IS curve is.

c) Mention if the value of the slope is positive or negative.

d) Provides the definition of the IS curve.

2. With the following data, solve what is requested: consumption is C = 3 + 0.75Yd, the investment function is I = 900 - 50, taxes are zero (T = 0) and government spending is G = 920.

a) Generate the equation of the IS curve using the parameters and data provided.

b) Calculate the amount of income for a 9% tax.

c) Determine the value of the slope of the IS curve.

d) Plot the IS curve for an interest interval of 0% to 20%.