Consider an open economy described by the following equations and the Mundell-Fleming model of an open economy.

G = 2,500

T = 2,000

C = 500 + 0.75(Y-T)

I = 900 - 50r

NX = 1,500 - 250 e

M/P = Y - 40r

M = 3000

P=3

r = r* =5

a)Derive the IS* and LM* curves

b) Calculate the equilibrium exchange rate, income, and net exports

c)Assume a floating exchange rate. Calculate what happens to the exchange rate, income, net exports and money supply if the government increases expending by 500

d)Now, assume a fixed exchange rate. Calculate what happens to the exchange rate, income, net exports, and the money supply if the government increases expending by 500