1. Assume you have the following model of the expenditure sector: AD = C+I+G+NX C =400 + (0.8) YD Io = 200 G = 300 + (0.1)(Y* - Y) YD = Y - TA + TR NX. = - 40 TA = (0.25)Y TR. = 50 a. What is the size of the output gap if potential output is at Y* = 3,000? b. By how much would investment (I.) have to change to reach equilibrium at Y" = 3,000, and how does this change affect the budget surplus? c. From the model above you can see that government purchases (G) are counter-cyclical, that is, G is increased as national income decreases. If you compare this specification of G with one that has a constant level of government spending (for example, G. = 300), how would the value of the expenditure multiplier differ? d. If TR (transfer payments) increased by 100, what would be the new level of output