3. The following equations describe an economy Y. All values (except the parameters) are in millions of dollars. ? = 500 + 0.80?? , ?? =?-7 , T = 250 +0.15? , / = 430 , G = 520 , ? =400 , M = 280 + 0.2? where: ( = consumption expenditure; YD = disposable income; Y = real GDP; I = net taxes; I = investment; G = government expenditure; X = exports; M = imports a) Derive the aggregate expenditure function (AE) of this economy. (2 marks) b) Calculate the equilibrium expenditure (= equilibrium level of real GDP). (2 marks) c) Calculate the expenditure multiplier. (1 mark) d) Suppose that the full employment level of real GDP of economy Y is $4500 million. Identify the type of output gap that is persistent in this economy? What is the size of this output gap? (2 marks) e) Suppose the government aims to change its expenditure to stimulate the economy as a result of the output gap in (d) above. What change in government expenditure is required to eliminate this gap? (Note: state both the direction and magnitude of this policy change). (2 marks)