Consider the following numerical version of the IS-LM model in a closed economy:
C=400+0.5Yd; I=700-4000r+0.1Y; G=200; TP=200; Yd=Y-TP
RLMD=0.5Y-7500r; RLMS =500; X=M
Question 1) Find the equations for the IS curve and LM curve.
Question 2) Solve for equilibrium real output (Y), interest rate (r), consumption (C), and Investment (I).
Question 3) If government spending increased to 700, solve again for the equilibrium Y, r, C, and I.