Hi Course Hero,

I am having trouble trying to figure out how to answer the question below:

5. Algebra of the income-expenditure model Consider a small economy that is closed to trade, so its net exports are equal to zero. Suppose that the economy has the following consumption function, where C is consumption, Y is real GDP, I is investment, G is government purchases, and T is for net taxes C = 30 + 0.75 x (Y - T) Suppose G = $25 billion, I = $60 billion, and T = $20 billion. Given the consumption function and the fact that, in a closed economy, total expenditure can be calculated as Y = C + I + G, the equilibrium output level is $ billion. Suppose the government purchases are increased by $50 billion. The new equilibrium level of output will be equal to $ billion. Based on the effect of the change in government purchases on equilibrium output, you can tell that this economy's spending multiplier is equal to