Consumption: C= 1000 + 0.6Yd - 400r

Investment: I=250 - 500r

Government spending: G=500

Exports: X=1500

Imports: M=500+0.4Y

Income tax rate: t=0.2

Money demand: Md = 1000 - 250i

Money supply: Ms=985

Expected inflation rate: e=0.05

where Yd is disposable income, i is the nominal interest rate and r is the real interest rate.

Question: What is the equilibrium nominal interest rate and real interest rate? Explain your calculation.