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Consider an open economy with government. Suppose it is described by the following equations: C = 1350 + 0.75 (Y - T) - 1200r I

Consider an open economy with government. Suppose it is described by the following equations:

C = 1350 + 0.75 (Y - T) - 1200r

I = 3000 - 800r; G = 4020; T = 20 + 0:2Y

EX = 4500; IM = 15 + 0:24Y

L = 8Y - 100000r

M = 18960000; P = 120; rrr = 0:2

(a) Find out the equations for the IS and LM curves (do not round up your answer, leave the fraction as it is).

(b) Find out the equilibrium r and Y:

(c) Is the budget balanced? How can you say so?

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