1. 15 percent) Desired consumption and investment are

C^d = 360 - 200r + 0.1Y

I^d = 120 - 400r

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

1. Find an equation relating desired national savingS^dtorandY.
2. What value of the real interest rate clears the goods market whenY= 600? Use both forms of the goods market equilibrium condition. What value of the real interest rate clears the goods market whenY= 640?What ifY= 560? What ifY= 680?

Graph the IS curve.