[8 points] Consider the following economy: a) b) c) d) C=l 500+0.5(Y-'Ij100r 12750-150r T2200 (3:600 L=[}.5Y-250r s25090 P22 Expected ination = 0. Government Budget = T-G. SHOW WORK for all calculations. Solve for the IS curve and the LM curve. Solve for the equilibrium values of r and Y. [hint Y is a whole number; note: do not multiply the solution of r by 100; simply plug it directly as is into the equations to solve for Y] Use the results from c) to solve for equilibrium C, I, and the Government Budget. Now suppose that the hill-potential level of output is equal to 5500 (i.e. Y = 5500). Draw the IS- LM diagram that correctly shows the IS, LM, and FE line give the information you have calculated and the full-potential level of output. Now suppose that G increases to 850. "What is the impact on the equilibrium r, Y, C, and I. Calculate. Discuss the impact of a rise in G on the economy, providing economic reasoning. No gure. Lastly, if the full-employment level of output (T') = 5500, did the rise in G (from 600 to 850) bring the economy back to full-employment? Briey discuss