IS Equation
Y = AD = C + I
Y = 100 + 0.8 Y + 120 - 5r
LM Equation
Md=Ms
120=0.2y -5r
5r = 0.2y -120
r = 0.04y + 24
Equilibrium Level of income
Y = 100 + 0.8y +120 - 5(0.04y + 24)
Y = 250
Equilibrium Level of Interest rate
r = 0.04(250) + 24
r = 34%
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