Given the following:

Y = C + I + G.

C= 50 + 0.7Y d

I= 180

G= 160, T = 200

1. Determine the equilibrium level of output (Y).

2. Calculate Y d , C, S.

3. Calculate the expenditure\ tax multiplier.

4. Now suppose that the potential GDP equals 1100, By how much would government spending\

tax need to change to close the gap?