Consider a small closed macroeconomy where the potential level of GDP is $1400 million. The government is currently enjoying surplus with government purchases, G=$150 million and fixed taxed, T=$240 million. Consumer purchase behavior is described by the equation, C=150+0.75(Y-T), and firms investment spending is fixed at I=$100 million.

1. What is the equilibrium level of GDP?
2. What is the simple/oversimplified multiplier for this economy?
3. What is the simple/oversimplified tax multiplier for this economy?
4. The government is considering increasing government spending by 50% or reducing taxes by 50%. Which of these actions would more likely move the economy closer to the potential level of GDP?