1. 15 percent) Desired consumption and investment are

As usual, Y is output and r is the real interest rate. Government purchases G are 120.

1. Find an equation relating desired national saving S^d to r and Y.
2. What value of the real interest rate clears the goods market when Y = 600? Use both forms of the goods market equilibrium condition. What value of the real interest rate clears the goods market when Y = 640?What if Y = 560? What if Y = 680?

Graph the IS curve.