Assume that the following equations represent goods and money market for an economy.

C = 60 + 0.8Yd

I = 150 -10r

G = 250

T = 200

Ms = 100

Md = 40 + 0.1Y - 10r

a) Derive the equation for the IS curve

b) Derive the equation for the LM curve

c) Compute the equilibrium level of output and interest rate.

d) Suppose that the government of a nation devalues the domestic currency and as a result, imports fall by $500, exports rise by $500 and real consumption expenditure rise by $250. What is the trade balance now? Did the devaluation improve the balance of payments?