JNU SIS 2014 Question 17: IS-LM model

Let the following represent the structure of a small open economy with a fixed exchange rate : $C = 40 - 6*r + 0\cdot 8(Y - T)$ $T = 25 + 0\cdot 2Y$ $I_P = 60 - 4*r$ $G = 50$ $NX = 110 - 0\cdot 04*Y - 20*e$ $(M/P)^D = 0\cdot 2*Y - 5*r$ $M^S/P = 60$ $e = 2$ where $C$ is consumption, $Y$ is output, $T$ is taxes, $G$ is government expenditure, $I_P$ is planned investment, $r$ is rate of interest, $NX$ is net exports, $(M/P)^D$ is demand for real balances, $M^S/P$ is real money supply. Initially, assume that the foreign and domestic interest rates are equal, or that $r = r^f$. The $IS$ and $LM$ equations in terms of the domestic interest rate $r$ can be expressed as