A small open economy is described by the following set of equations:
C=50+0.75(Y-T)
I=200-20r
NX = 200-50€ G=T=200 (Balanced Budget)
(M/P)^d =Y-200r
M = 3,000
P=3
r = 5
(a) Derive and graph the IS and LM* curves.
(b) Calculate the equilibrium exchange rate, income and net exports.
