Question: Given the following equations: Y = C + I + G + X C = 100 + 0.9Yd (Consumption function) I = 200 - 500r

Given the following equations: Y = C + I + G + X C = 100 + 0.9Yd (Consumption function) I = 200 - 500r (Investment function) M = 0.8Y - 2000r (Real money demand) X = 100 - 0.12Y - 500r (Net export) G = 200 (Government purchases) T = 0.2 (Tax rate) L = 800 (Real money supply) Required 1. Derive equation for IS and LM curves. 2. Compute the r and y at which the two markets are clearing 3. Compute the values of C, I, X and M. 4. Calculate the monetary and fiscal policy multipliers and interprate them..

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