Consider the following Open Economywith the following parameters, in billions:

Consumption (C)= 300 + .8(Y_D). Personal Disposable Income (Y_D) = Y - T + TR

Government Spending (G)= 400. Transfers (TR)= 100. Taxes (T)= .25Y.

Investment (I)= 400. Exports (X)= 200. Imports (IM)= 300.

In this Economy, Equilibrium Income is _____________ , the Government Budget is _____________ and the Government Spending/Investment Multiplier is ______________.

Select one:

a.

2700 billion, Surplus of 175 billion, 2.5

b.

2500 billion, Surplus of 125 billion, 2.5

c.

2700 billion, balanced budget, 5

d.

5000 billion, Deficit of 125 billion, 5

e.

2500 billion, surplus of 125 billion, 5