. 5. = = = Assume you have the following model: c = 400 + (0.8)Y | = 200 G = 300 + (0.1)(Y* - Y) YD = Y - TA + TR Xnet = X - M = -40 TA = (0.25)Y TR = 50 Y* = potential GDP = $3000 =- = = a. b. c d. From the model above, you can see that government purchases (G) are countercycylical. Explain why this is the case. Find equilibrium GDP (Y) using the model above? What is the value of the multiplier here? What is the GDP gap? How would you describe current economic conditions? By how much would investment spending (AI) have to change to reach equilibrium at potential? If you compare this specification of G above with one that has a constant level of government spending (for example, G. = 300), how would the value of the expenditure multiplier differ? d. =