Macro Island is well described by the ISLM model. Government purchases are 100, the money supply is 600, the price level is 2, and the government runs a balanced budget. People always save a quarier of their disposable income. The demand for | investment goods is given by = 200 25r, and the demand for real money balances is given by (%]d =Y 20r. v a. The eguation for the I8 curve is. b. The equation for the LM curve is (1Y = 400+ 100r (Y = 400 25r (1Y = 500+ 40r Y = 500 20r ()Y =900+ 25r Y =900 100r (1Y = 300+ 40r (Y = 300+ 20r . Calculate the equilibrium interest rate and level of income. d. If the povernment increases ils purchases by 30 (without changing taxes), what is the new equilibrium interest rate and level of income? e. The calculations in part d illustrate that, according to the JS-LM model, an increase in government purchases the equilibrium interest rate and - | equilibrium income. f. If the central bank increases the money supply to 720 (with government purchases remaining at 100), what is the new equilibrium interest rate and level of income? g. The calculations in part f illustrate that, according to the fSLM model, an incresse in the money supply the equilibrium interest rate and _ | equilibrium income. h. If the price level increases from 2 and 4 {and the money supply remains at &00), what is the new equilibrium interest rate and level of income? i. The calculations in part b illustrate that, according o the [S-LM model, an increase in the price level the equilibrium interest rate and - equilibrium income. This resull explains why the aggregate curve slopes