2.The demand and supply of a corporate bond (in units) is given by the following equations respectively.

D = 60k + 0.8W - 60e + 2y +5i*

S = 600 - 40k + 90e + 8BD + 5y

Wherek = the yield to maturity of the bond in percentage terms

W = the aggregate wealth of investors in billions of dollars

e = the expected rate of inflation in percentage terms

y = national income

BD = government budget deficit

i* = foreign rate of interest in percentage terms

Suppose W = 2,000 billion, e = 2%, y = $500 billion, BD = $50 billion, i* = 10%, find equilibrium k and equilibrium quantity of the bond traded.