Question: C = 80 + 0.5Yd I = 400 - 20r + 0.2Y G = 500 T = 0.5Y TP = 150 X = 250 +

C = 80 + 0.5Yd I = 400 - 20r + 0.2Y G = 500 T = 0.5Y TP = 150 X = 250 + 100e(Pf /P) M = 800 - 20e(Pf /P) P f = 6 P = 2 L = 0.8Y - 50r = 300 KAB = 25(r - r*) r* = 8 a. Derive the equation for the IS curve. [3 points] b. Derive the equation for the LM curve. [2 points] c. Derive the equation for the BP curve. [3 points] d. Determine the equilibrium values of Y, r and e. [3 points] e. What are the balances in the current account and the capital account in this equilibrium? [2 points] f. Suppose now that the nominal supply of money increases to 400. What are the new equilibrium values of Y, r and e? [3 points] g. What are the balances in the current account and the capital account in this new equilibrium?

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