@An economy is described by the following equations: Desired consumption 0" = 130 + 050' T) - 5007' Desired irwestment I\" = 100 5002' Government purchases G = 100 Taxes T = 100 Real money demnd lat = 0.51' 1000?' Money supply M = 1320 Fiemployment output 1' = 500 Assume that expected ination is zero so that money demand depends directly on the real interest rate. Also assume the SEAS is horizontal at the current price level. I. Write the equations for the IS and LM curves. (These equations express the relationship between 1- and Y when the goods and asset mar kets are in equilibrium.) b. Calculate the full-employment values of output, the real mterest rate, the price level, consmnptlon. and mvesunent. c. Now suppose that because of investor optimism about the future marginal product of capital, the investment function becomes ra = 200 - 500r. Assuming that the economy was initially at full employment, what are the new values of output, the real interest rate, the price level, consumption, and investment in the short run? In the long run? Show your results graphically