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Suppose the economy is described by the following equations: (2 = 100 + 0.8591 Ti 100m l = 200 2000c G = 500, T =
Suppose the economy is described by the following equations: (2 = 100 + 0.8591" Ti 100m l = 200 2000c G = 500, T = 100 + 0.2V EX = 35, IM = 50 + 0.08Y L = EDY 600000r M = 2200000, P = 110 Where, C stands for consumption, Y for output (or GDP}, T for taxes, r for the interest rate, | for investment, G for government purchases, EX for exports, IM for imports, L for money demand, M for money supply, and P for the price level. (3] Find out the equation for the IS and LM curves {40 points] and sketch the corresponding curves {20 points}. (b) Find out the equilibrium r and 'r' (40 points]
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