Can someone please show me how to solve this question ? Thanks

0 Exercise 1 So far we have assumed that the scal policy variable T is independent of the level of income. In the real world, however, this is not the case. Taxes typically depend on the level of income, and so tend to be higher when income is higher. Here we examine how this automatic response of taxes can help reduce the impact of changes in autonomous spending on output. Consider the following model of the economy: C=co+c1YD 5=YT T=to+t1Y G and l- are both constant. e) Now solve for taxes in equilibrium. f) Suppose that the government starts with a balanced budget and that there is a drop in co. What happens to Y ? What happens to taxes? g) Suppose that the government cuts spending in order to keep the budget balanced. What will be the effect on Y ? Does the cut in spending required to balance the budget counteract or reinforce the effect of the drop in Co on output? (Don't do the algebra. Use your intuition and give the answer in words.)