4. An economy is described by the following equations:

Desired consumption:C = 130 + 0.5(Y-T) - 500r ,

Desired investment: I = 100 - 500r

Government purchases:G = 100,Taxes: T = 100

Real money demand:L = 0.5Y - 1000r,Money supply:M = 1320

Full-employment output:Y_F = 500.

Assume that expected inflation is zero so that money demand depends directly on the real interest rate (r).

a. Write the equations for the IS and LM curves.

b. Calculate the full-employment values of output, the real interest rate, and the price level.