1. The following is information for the economy of Tandor, where taxes are wholly autonomous: C =40 + 0.8YD where YD = (YT) G = T: 360 |=120 XN=1070.1Y a. What is the value of equilibrium income? (6 marks) b. At equilibrium, what is the amount of budget deficit or budget surplus? (6 marks) c. If government increased both its spending and taxes by $60, what would be the new equilibrium income? (6 marks) 2. Given the target reserve ratios, amounts of reserves and deposits shown in the table below, complete column 4 showing the amounts by which the deposits could increase (all dollar gures in billions). (12 marks) (4) ( 1) (2) (3) Maximum Target Reserve Reserves Deposits Increase in Ratio ($billion) ($billion) Deposits ($billion) a. 6 30 450 b. 2 70 2,700 C. 8 40 430