Question 1 [16 points] An economy is described by the following equations, where all the variables have the usual definition: C = 1700 + 0.8 (Y - T) - 2000r IP = 3000 - 1100r G =G=2500 X =X = 80 M = 0.06Y T =T =2500 a) Find an equation relating planned spending to output and the real interest rate. Also find the short-run equilibrium output when real interest is 7%. [6 points] b) Find the income-expenditure multiplier. [4 points] c) If potential output = 20000, by how much would government purchases have to change in order to eliminate any output gap? [6 points]