Assume the following for the economy of a country:

a. Consumption function: C = 85 + 0.5Yd

b. Investment function: I = 85

c. Government spending: G = 60

d. Net taxes: T = - 40 + 0.25Y

e. Disposable income: Yd Y - T

f. Equilibrium: Y = C + I + G Solve for equilibrium income. (Hint: Be very careful in doing the calculations. They are not difficult, but it is easy to make careless mistakes that produce wrong results.) How much does the government collect in net taxes when the economy is in equilibrium? What is the government’s budget deficit or surplus?