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Consider the following numerical model: C = 800 + 0.5YD I = 0.25Y-3000i+600 G = 1200 T = 800 4) If public spending (G) was
Consider the following numerical model:
C = 800 + 0.5YD
I = 0.25Y-3000i+600 G = 1200
T = 800
4)If public spending (G) was to increase by 200 (from 1200 to 1400), what would the change in income (Y) in the goods-market equilibrium be, assuming the interest rate (0.75%) remains unchanged?
A) +1200.
B) -1200.
C) +800.
D) -800.
E) none of the above.
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