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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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