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2. Consider an economy with no imports, or exports, and with fixed prices and interest rates. Let C = 150 + 0.60(Y-T) 1 = 50

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2. Consider an economy with no imports, or exports, and with fixed prices and interest rates. Let C = 150 + 0.60(Y-T) 1 = 50 G=100 T= 100 a. Suppose planned investment rises by 10 to 1 = 60. Calculate the new equilibrium output b. If government is added to the original (1 = 50) economy from part (2). The government spends 100 and receives taxes of 100 (such that the government budget is balanced with no deficit.) compute the new equilibrium income c. What is the fiscal stands of this economy? d. Full employment output in this economy is 800. Suppose government spending is raised to attain this level of income, but taxes are not changed. What level of government spending will result in an equilibrium output of 800? How large will the deficit be? What will be the level of consumption

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