1. An economy is described by the following equations: Expenditure Sector: Money Sector: S = - 200 + (1/5)YD Ms = 400 TA = (1/8)Y - 40 Md = (1/4)Y + 100 - 5i TR = 60 I = 300 – 10i G = 70 NX = 150 - (1/5)Y Here S is saving; TA is taxes; TR is transfers; I is investment; G is government spending; NX is net exports; Ms is money supply; and Md is money demand. a) (30p) Find the IS and LM equations for this economy. Draw those equations in an IS-LM framework. b) (20p) Find the equilibrium level of output and interest rates. Calculate also the equilibrium values of investment (I), net exports (NX), and money demand (md).

Thomas kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operation. thomas's fastest-moving inventory item has a demand of 6,000 units per year. the cost of each unit is $100, and the inventory carrying cost is $10 per unit per year. the average ordering cost is $30 per order. it takes about 5 days for an order to arrive, and the demand for 1 week is 120 units. (this is a corporate operation, and the are 250 working days per year.)a) what is the eoq? b) what is the average inventory if the eoq is used? c) what is the optimal number of orders per year? d) what is the optimal number of days in between any two orders? e) what is the annual cost of ordering and holding inventory? f) what is the total annual inventory cost, including cost of the 6,000 units?