3. Consider an economy described by the following equations:

Y=C+ Ig + G

C=300+0.80 (Y T)

Ig=1,10030r, where r is real interest rate (in percent) = 10%

G=350

T=200

where Y is the real GDP, C is the total consumption, Ig is the gross investment, G is the government purchases, T is income taxes, and r is the real interest rate. If the economy were at full employment (i.e. at its natural rate of output) the real GDP (Yp) would be $6,950 billion. (All figures are in billions of USD.)

a. Calculate the equilibrium real GDP (Yeq). How does it compare to the full-employment level (Yp)?

b. Without changing the monetary policy and taxes (i.e. same r and T), how much government spending (G) needs to be changed by to restore the full employment level of real GDP?

c. If the government would like to utilize the lump-sum tax (instead of changing government spending) to restore the economy to its full-employment level (Yp), what would be the new lump-sum tax (T) given that there is no change in the monetary policy and government spending (i.e. same r and G)?

4. Identify whether the following statement is TRUE or FALSE. a. The magnitude of the spending multiplier always higher than the tax multiplier b. The impact of an expansionary fiscal policy may be strengthened if it crowds out some private investment spending c. A decrease in government spending and a cut in taxes would be a pair of fiscal policies that reinforce each other. d. A decrease in taxes is one way to pursue a contractionary fiscal policy because it will make government revenues contract

can u answer these question?