Given the following economic information for Country A (in RM billion):

Saving (S) = –500 + 0.3Yd

Investment (I) = 400 – 200r

Government spending (G) = 500

Taxes (T) = 200

Nominal money supply (Ms ) = 4000

Money demand for transactions (Md t/P) = 0.2Y

Money demand for speculations (Md s) = 1600 – 500r

Price (P) = 2 di mana Y dan r adalah masing-masing mewakili tingkat pendapatan dan kadar bunga.

where Y and r represent the levels of income and interest rate, respectively. Based on the above information,

i) . Derive an expression for the IS and LM curve (four decimal point) in Y says.

ii) . Calculate the equilibrium levels of income and interest rate (three decimal point).

iii) Suppose that the autonomous investment increased by RM100 billion. Find the new equilibrium levels of income and interest rate.

iv) Demonstrate and explain your answers to parts (ii) and (iii) using an appropriate diagram

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