QUESTION 1. (a),

Given the following equations; y=c+i+g+x, c=200+0.8yd (consumption function), i= 150-400r (investment function), m=0.8y- 1500r (real demand function), x=100-0.12y-400r (net export) g=250, (government purchases) T=0.25(tax rate), l=900(real money supply).

REQUIRED;

1. Calculate the value of y and r, at equilibrium
2. Calculate the values of investment and exports

(b)

Given the following equation;

Y=C+I+G+X, Where; C=100+0.9Yd (consumption function), i=200-500r (investment function), M=0.8Y-2000r (Real money demand), X=100-0.12Y-500r (net export), G=200 (Government purchases), T=0.2y (tax rate) and L=800 (Real money supply)

REQUIRED;

1. Derive equations for IS and LM curves
2. determine the r and y pair at which the two markets are clearing
3. compute the values of C,I,X and L