(5) (step 2): Suppose the central bank sets a monetary base target () as 1370. Derive the LM curve (6) (step 3): Find the intersection of two curves. (7) (step 2") Suppose, now the central bank sets the target interest rate (instead of setting the monetary base target), and supply money accordingly. Describe the LM curve, when the target interest rate is 5%. : Now, LM curve becomes (flat / upward slopping). (For every level of the central bank changes the money supply so that the equilibrium interest rate from financial market is %(B) Derive the new equilibrium from the IS-LM model (9) Graphically represent the new equilibrium with the IS and L.M curve, and their intersectionC = 200 + 0.5 * YD YO = Y - T / = 200 + 0.25 * Y - 400 * i T = 200 G = 500 (p) = 0.5 * Y - 1500 * i P = 1 (4) (step 1): Derive the IS curve