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

C= 600 + .9 Yd Consumption Function

T = 300 + .25 Y Tax

I = 800 - 50 i Investment equation

G = 1500 Government Expenditures

NX = 505 Net Export

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

(M/p) s = 3000 Money Supply

1- Compute the value of Multiplier (M).

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 (i) 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.

7- Suppose the money supply increases by $500 to $3500:

a- Drive the new LM equation

b- calculate the new equilibrium interest rate and real GDP with part 6a.