Consider the following economy Consumption spending: C=7000+0.95(Y-T) Private investment: I=2000-500r Government spendin

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answerhappygod
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Consider the following economy Consumption spending: C=7000+0.95(Y-T) Private investment: I=2000-500r Government spendin

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Consider the following economy
Consumption spending: C=7000+0.95(Y-T)
Private investment: I=2000-500r
Government spending: G=300
Taxes: T=400
Real money demand: (M/P)d=Y-1200r
Real money supply: (M/P)s=2000
a) Find the equation for the IScurve when the goods market gets to the equilibrium. (4 points)
b) Find the equation for the LM curvewhen the money market gets to the equilibrium. (4 points)
c) Solve for the equilibrium realoutput and interest rate when both goods and money markets get tothe equilibrium. (4 points)
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