d. Increased usage of automatic teller machines reduces the demand for money. Q#10 Desired consumption and investment are Cd = 4000 - 4000r + 0.20Y; Id = 2400 - 4000r. As usual, Y is output and r is the real interest rate. Government purchases, G, are 2000. a). Find an equation relating desired national saving, s, to r and Y. b). i) What value of the real interest rate clears the goods market when Y = 10,000? Use both forms of the goods market equilibrium condition. ii) What value of the real interest rate clears the goods market when Y = 10,200? Graph the IS curve. c). Government purchases rise to 2400. How does this increase change the equation for national savin in Part (a)? What value of the real interest rate clears the goods market when Y = 10,000? Use both forms of the goods market equilibrium condition. How is the IS curve affected by the increase in G? Q#11 a) What determines the position of the FE line? Give two examples of changes in the economy that would shift the FE line to the right. b). What relationship does the IS curve capture? Derive the IS curve graphically and show why it slope as it does. Give two examples of changes in the economy that would cause the IS curve to shift down and to the left. c). What relationship does the LM curve capture? Derive the LM curve graphically and show why it slopes as it does. Give two examples of changes in the economy that would cause the LM curve to shift down and to the right