3. Consider the following Economy: C = 1000 + .75Yd; Yd = Y - T + TR; T = 600, TR = 200; G = 500; I = 1000 -10,000r; r = .04; Imports =200; Exports = 100.

1. Solve for Equilibrium Income.

1. Now, the U.S. uses expansionary Monetary Policy to encourage Investment, And Interest rates fall to .02. What is the new equilibrium income?

1. What is the likely impact of lower interest rates in the U.S. (relative to other countries) likely to have on the value of the dollar and imports and exports?