Question 2 (Goods Market) (25 points) Suppose you are given the following information for an economy: C= 1000+0.8YD, I =200, G=400, T=100, NE=0 a) (9 points) What is the total expenditure (demand) function? What is the equilibrium national income? Illustrate your results in a diagram. b) (16 points) Suppose the equilibrium national income you derived from part a) is below the normal national income level by 2000 units. Government decides to adjust its spending to close the gap between actual national income level and normal national income level. (i) (6 points) What is multiplier here? What would be the change in government spending (G)? (ii) (6 points) Explain why and how government spending changes lead to changes in equilibrium national income. (iii) (4 points) Show the results from parts (i) and (ii) in the diagram you draw in part a)