Assume the following equations summarize the structure of an open economy:

C= 500 + .9 (Y - T)Consumption Function

T = 300 + .25 YTax

I = 1000 - 50 iInvestment equation

G = 3000Government Expenditures

NX = 505NetExport

(M/P)d = .4 Y -37.6 iDemand for Money

(M/p) s = 3000Money Supply

1- Compute the value of Multiplier (k).

2- Compute the value of planned autonomous expenditure (Ap)

3-Derive the equation for the IS curve.

4- Derive the equation for the LM curve.

5- Compute the equilibrium interest rate (r) and real GDP (Y).

6- If government spending increases by $400:

a- Derive the new equation for the new IS curve.

b Computer the new equilibrium interest rate and real GDP.

c- Compute the amount of crowding out.