I know how to do everything else. I just need help finding the change in Y in the last formula. I have been trying to figure it out for too long. I know Y is around 25.716 from trial and error, but I do not know how to find it. The overall answer is also 42.86 billion. Please be detailed with the explanation and include all formulas involved with finding Y and any steps to come to the answer.

Agovernment is currently operating with an annual budget decit of $40 billion. The government has determined that every $10 billion reduction in the amount of bonds it issues each year would reduce the market interest rate by a given m = 0.10 percentage point. Furthermore: it has determined that every 0.10 percentage point change in the market interest rate generates a change in planned investment expenditures in the opposite direction equal to x = $4 billion. Finally. the government knows that to eliminate an inflationary gap and take into account the resulting change in the price level: it must generate a net leftward shirt in the aggregate demand curve equal to the inflationary gap of $60billion. Government increases taxes by $1 billion, interest rate falls by 0.10 percentage points and planned investment expenditure increases by $0 40 billion MPO Now, when taxes are increased by $1 billion and because of that tax increase, AD falls by the amount ofthe tax multiplier: m . But for every 51 billion tax mx MPC mx _ MPC mx increase, investment increases AD by 1 MP0 Therefore. the net reduction in AD due to $1 billion increase in taxes is: m_ m - m As a result. AYxri MPC) to reduce AD by AYE taxes need to be raised by an amo t: W 2 billion. A government is currently operating with an annual budget deficit of $40 billion. The government has determined that every $10 billion reduction in the amount of bonds it issues each year would reduce the market interest rate by 0.10 percentage point. Furthermore, it has determined that every 0.10 percentage point change in the market interest rate generates a change in planned investment expenditures in the opposite direction equal to $4 billion. The marginal propensity to consume is 0.75. Finally, the government knows that to eliminate an inflationary gap and take into account the resulting change in the price level, it must generate a net leftward shift in the aggregate demand curve equal to $60 billion. Assuming that there are no direct expenditure offsets to fiscal policy, how much should the government increase taxes? $ 42.86 billion. (Enter your response rounded to two decimal places.)