Question #4: IS-LM Model [23 Points] Assume the following model of the economy in Liechtenstein, Consumption Function: C = 1600 + 0.75(Y - T) Investment Function: I = 1800 - 60r Taxes (T) = 2400 Government Spending (G) = 2200 Money supply (M ) = 1800 Price level (P) = 3 Money demand function (M ) = L(r, Y) = 0.4Y - 1274r (a) Determine the equation for the IS curve, showing Y as a function of r. [3 Points] (b) Determine the equation for the LM curve, showing Y as a function of r. [2 Points](c) What are the short-run equilibrium values for the following variables: (i) real interest rate (r) [2 Points] (ii) output (Y) [1 Point] (d) What are the short-run equilibrium values for the following variables: (i) Consumption (C) [2 Points] (ii) Investment (1) [2 Points] (hii) private savings [2 Points] (iv) national savings [2 Points] (e) Suppose there was a decrease in consumer confidence in Liechtenstein. As a result of the decrease in consumer confidence the consumption function changes to C = 915 + 0.75(Y -T). Use the IS-LM model to graphically illustrate the impact of lower consumer confidence in the economy of Liechtenstein. [3 Points] (f) Suppose there was a decrease in consumer confidence in Liechtenstein. As a result of the decrease in consumer confidence the consumption function changes to C = 915 + 0.75(Y -T). Calculate the new equilibrium levels of the interest rate (r) and real output (Y) in Liechtenstein. [4 Points]