Question: Please help. 1) Assume the following equations summarize the structure of the economy. C = Ca + 0.5(YT); Ca = 500; T = 200; Ip

Please help. 1) Assume the following equations summarize the structure of

Please help.

1) Assume the following equations summarize the structure of the economy. C = Ca + 0.5(YT); Ca = 500; T = 200; Ip = 1,500-50r; G = 100; and Md = 0.25Y 25r; Ms = 250 a) Derive the equation for the IS curve (0.5) b) Derive the equation of the LM curve. (0.5) 0) Compute the equilibrium interest rate and output in the IS- LM model. (0.5) (1) Suppose the government increases its spending by 500. Compute the new equilibrium interest rate and output. (0.5). What is the size of the crowding out effect (0.5)? Explain the mechanism of crowding out effect (1)

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