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Equilibrium income in the goods market model with endogenous taxes An economy is described by the following equations: Y = C + I + G

Equilibrium income in the goods market model with endogenous taxes

An economy is described by the following equations:

Y = C + I + G

C = 0.75 YD+ 20

T = 0.2 Y + 4

G = 20

I = 25

a)Calculate equilibrium output and equilibrium private and public saving.

b)With how much does equilibrium output falls, if government reduces government expenditure with 1 unit?

Explain the event in b) for the multiplier diagram

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