Consider the economy governed by the following equations: The consumption function: C = 200 + 0.75(Y -T) The investment function: I = 200 -25r Government is running a balanced budget: G =T = 100 Money demand: M )" = Y - 100r Money supply: M = 1000 and P = 2 i. For this economy draw the IS curve for r ranging from 0 to 8 ii. Draw the LM curve for r ranging from 0 to 8 iii. Find the equilibrium interest rate and the equilibrium level of income implied by the IS- LM model. Calculate the values of C, I and G at equilibrium. iv . Suppose that government expenditure increases by 50. By how much does the IS curve shift? Find the new equilibrium level of income and the new equilibrium level of the interest rate. Calculate the values of C, I and G at equilibrium. What do you notice about changes in Y and I - calculate the value of the multiplier in the Keynesian world and in the IS-LM world in your explanation. What effect could explain your results? V . Explain the transmission mechanism of fiscal policy