QUESTION 4 Consider an economy with the following characteristics (all variables measured in billions of dollars). C =40 + 0.6Yd t = 0.5 I = 15 G = 20 X = 5 M = 0.1Y Where Yd is disposable income and t is the income tax rate. (a) Calculate the equilibrium GDP. (b) At the equilibrium GDP, calculate the fiscal balance. (c) If the full employment GDP is $80 billion, is the economy experiencing a recessionary or inflationary gap? Explain your answer. (d) If the government wants to close the gap, should government increase or decrease expenditure? By how much