(a) Calculate the equilibrium level of national income and the equilibrium interest rate given the following information on the goods and money markets:

Goods market:C = 40 + 0.6YdI = 200 - 20rG0 = 400t= 0.2

Money market:L1 = 0.2YL2 = 60 - 120 rM0 = 200

where Md = L1 + L2 andMs = M0

(b) Calculate the effect on the equilibrium level of national income and the interest rate when money supply increases to $450m.