Suppose the economy is described by the following equations:

C = 100 + 0.85 (Y T) 1000r

I = 200 2000r, G = 500, T = 100 + 0.2Y

EX = 35, IM = 50 + 0.08Y

L = 20Y 600000r

M = 2200000, P = 110

Where, C stands for consumption, Y for output (or GDP), T for taxes, r for the interest rate, I 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.

(a) 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 Y (40 points).

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