Please solve the following;

3. Assume now that transfers are given to consumers so that the above equations is actually : Of = 188 + TR +0.6(1 -t)Y - 50000r, (t = 0.4) (Desired consumption) Moreover, the rest of the world recovers from the recession. Hence, Yfor will increases to 14000 and "for reaches 0.04 in the current period. A new elected government thinks that the public deficit is unsustainable. It decides to perform two changes in its fiscal policy : 1. it increases the tax rate from 0.4 to 0.42; 2. it decreases spending and transfers by 20%. Assuming these changes are true and that Ricardian equivalence does not hold, what are the new short-run equilibrium values for the interest rate and output? Will there be a double-dip recession in the United-Kingdom?The economy of the United Kingdom can be characterized by the following set of equations : Y = 2400 MD P = 1470 + 0.4Y - 10000(r +*=) (Me = 0.03) (Real money demand) MS 2000 P (Real money supply) C = 388 + 0.6(1 -t)Y - 50000r (t = 0.4) (Desired consumption) 1 = 600 - 12000r (Desired savings) NX = 300 - 0.2Y + 0.01Yfor + 10000(7 -"for) (Net exports) Yfor = 12000 (Foreign real ouput) T for = 0.02 (Foreign real interest rate) G = 900 (Government spending) TR = 200 (Government transfers) where the relevant numbers are measured in (real) billions of pounds sterling. Answer the following questions: 1. Find the IS equation, the LM equation, the short-run equilibrium values of interest rate and output. Is the economy above or below its full output