Consumption expenditure = $180 b

Planned investment = $30 b

Government expenditure = $27 b

Export expenditure = $84 b

Import expenditure = $73 b

Autonomous taxes = $12 b

Income tax rate = 17%

Marginal propensity to save = 0.3

Marginal propensity to import = 0.1

actual level of income = 245b

1) consumption expenditure -11.35b

2) total savings 65b

3) autonomous net exports 35.5b

4) actual investment 65b , unplanned investment 35 b

5) autonomous planned expenditure 80.85b

6) aggregate expenditure is less than income level therefore not in equilibrium. what is the equilibrium level of income for this economy?

Illustrate this economy using the aggregate expenditure model. On the diagram, identify the equilibrium level of income as calculated in part 6) and the actual level of income ($245 b). Identify as required the vertical distance that represents unplanned investment calculated in part 4).Ensure label all axis and each component (line) you draw in the diagram.

Calculate the tax multiplier for the economy

a) government change autonomous taxes in order to achieve equilibrium income. Will it need to raise, lower or leave unchanged autonomous taxes to achieve this? If change, by how much does it need to be raised/lowered for the economy to be in equilibrium.

b) Instead of changing autonomous taxes the government decides to act directly to achieve a short run equilibrium? What would the government need to do precisely if it took a direct approach in its fiscal policy response.

c)Compare impacts of both a) and b) on the balance of the government budget which prior to this had been in deficit by $10b. If you had to advise the government on adoptingoneof these approaches which one would you argue for. Explain why.In your answer consider factors aside from the impact on the budget that may be relevant to the macroeconomy