They provide you with the following information for an open economy: Consumption, C = 120 + 0.85 Yd (disposable income); Private investment, I = 100 - 8 i; Public spending = 140; Income tax, t = 0.2; Transfers Tr = 0, Exports X = 130; Imports, M = 34 + 0.08Y; Money supply, M / P = 28; Money demand, L = 0.2Y-50i.
Using the information above, find:
to. The equation of the function IS___________________________
b. The equation of the function LM__________________________
c. The equilibrium interest rate, i _______ the equilibrium income, AND ___________
d. The open economy investment multiplier ___________ k = 1/1-c + ct + PMgM
and. Equilibrium graph, IS, LM