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3. Let's tweak the preceding problem by adding government spending and a proportional income tax: C= 25,000 + .88Yd I = 12,000 3000i G =
3. Let's tweak the preceding problem by adding government spending and a proportional income tax: C= 25,000 + .88Yd I = 12,000 3000i G = 8000 T= 051' Md = 80,000 + .10Y 375,000i Ms = 50,000 What are the equations for the IS and LM curves for this economy? Find the equilibrium values for aggregate output and the interest rate. Check the solution. What is the multiplier for this economy? Use a diagram to show how the introduction of the income tax affects the equilibrium solution
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