Given that in an economy, , I, M S =300, M t = 0.4Y, and M z =125-200r where, Y= income, C= consumption, I= investment, M S = money supply, M t = transactional-precautionary money demand, M z = speculative money demand and r= interest rate. Calculate; i. The equilibrium level of income and interest rate in this economy. (2 marks) ii. The level of C, I, M t , and M z when the economy is in equilibrium (4 marks)

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Given that in an economy, , I, M S =300, M t = 0.4Y, and M z =125-200r where, Y= income, C=
consumption, I= investment, M S = money supply, M t = transactional-precautionary money demand,
M z = speculative money demand and r= interest rate. Calculate;
i. The equilibrium level of income and interest rate in this economy. (2 marks)
ii. The level of C, I, M t , and M z when the economy is in equilibrium (4 marks)

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