4. (i) suppose that in an economy

C=100+0.8Y a, I =70.G =200,TR =150, t=0.20

(a) calculate the equilibrium level of income and multipleir

(b) Calculate budget surplus.

(c) what will be the new equilibrium income and new multiplier if t increases to 0.25.

(ii) Derive the balanced budget multiplier.

(iii) under what circumstances can the LM curve be horizontal? Use the diagram also.