Only questions 5-8. Thank you

The following equations describe an economy. (Think of C, 1, G, NX etc., as being measured in billions and i as a percentage; a 5 percent interest rate implies i=5). C = 800 + 0.85 YD t = 0.3 TR = 400 TA = tY G = = 900 NX = -60 I = 2000 50i L = 0.2Y 75i M = 1500 1. (20 points) Derive the IS equation. What is the value of ag which corresponds to simple multiplier with taxes? 2. (10 points) Derive the LM equation. 3. (10 points) What are the equilibrium levels of income and interest rate? 4. (20 points) What would be the new equilibrium levels of income and interest rate if as the result of COVID-19 pandemic, autonomous consumption decreased by 300, autonomous investment decreased by 1000, and the congress passed a stimulus bill that increased transfer payments by 300 and increased government purchases by 2000. (Hint: derive a new IS equation with this information and remember that transfer payments are subject to marginal propensity to consume in the consumption function) 5. (10 points) Calculate how much private investment is crowded out by this fiscal policy action. 6. (10 points) Calculate the new levels of equilibrium income and interest rate if, fearful of declining financial markets and frozen credit markets, the Federal Reserve decided to lower interest rates by increasing the real money supply by 1000. 7. (10 points) For each step, graph the IS and LM curves and clearly show their movements for the problems above. Although the graph needs not to be precise, you must clearly show if IS or LM curves shifted or tilted and in which direction. 8. (10 points) Write a paragraph and use graphs to explain how the slope of the LM curve determines the effectiveness or ineffectiveness of fiscal and monetary policy. The following equations describe an economy. (Think of C, 1, G, NX etc., as being measured in billions and i as a percentage; a 5 percent interest rate implies i=5). C = 800 + 0.85 YD t = 0.3 TR = 400 TA = tY G = = 900 NX = -60 I = 2000 50i L = 0.2Y 75i M = 1500 1. (20 points) Derive the IS equation. What is the value of ag which corresponds to simple multiplier with taxes? 2. (10 points) Derive the LM equation. 3. (10 points) What are the equilibrium levels of income and interest rate? 4. (20 points) What would be the new equilibrium levels of income and interest rate if as the result of COVID-19 pandemic, autonomous consumption decreased by 300, autonomous investment decreased by 1000, and the congress passed a stimulus bill that increased transfer payments by 300 and increased government purchases by 2000. (Hint: derive a new IS equation with this information and remember that transfer payments are subject to marginal propensity to consume in the consumption function) 5. (10 points) Calculate how much private investment is crowded out by this fiscal policy action. 6. (10 points) Calculate the new levels of equilibrium income and interest rate if, fearful of declining financial markets and frozen credit markets, the Federal Reserve decided to lower interest rates by increasing the real money supply by 1000. 7. (10 points) For each step, graph the IS and LM curves and clearly show their movements for the problems above. Although the graph needs not to be precise, you must clearly show if IS or LM curves shifted or tilted and in which direction. 8. (10 points) Write a paragraph and use graphs to explain how the slope of the LM curve determines the effectiveness or ineffectiveness of fiscal and monetary policy