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questions are in the picture 3. Consider an economy described by the following equations: Y = C + I + G + X (Income identity)

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3. Consider an economy described by the following equations: Y = C + I + G + X (Income identity) C = 300 + .8 Yd (Consumption) with investment I = $300, government spending G = $100, net exports X = $100, and the tax rate t = .2. a. What is the level of income when spending balance occurs? What is the multiplier? b. Consider the same economy, except that investment depends positively on income, so that I = 300 + .2Y. What is the level of income and multiplier now? c. Returning to the investment equation in Part a, suppose that the tax rate is increased to .4. What happens to income and to the multiplier? 4. Consider an economy described by the following equations: 1/ = C + I + G + X (Income identity) C = 400 + ,9 Yd (Consumption) with investment I = $300, government spending G = $100, net exports X = $100, and the tax rate t = .5. a. What is the level of income when spending balance occurs? What is the multiplier? b. Suppose government spending increases to $200. What is the new level of income? 5. Consider an economy described by the following equations: Y = C + I + G + X (Income identity) c = 400 + ,9 Yd (Consumption) with investment I = $200, government spending G = $200, net exports X = $100, and the tax rate 1' = .3333. a. What is the level of income when spending balance occurs? What is the multiplier? b. Suppose government spending increases to $300. What is the new level of income? 6. Consider an economy described by the following equations: Y = C + I + G + X (Income identity) C = 300 + .8Yd (Consumption) X = 100 .04Y (Net exports) with investment I = $200, government spending G = $200, and the tax rate t = .2. a . What is the level of income when spending balance occurs? What is the multiplier? Compare your answer to the multi- plier in Problem 3. b. Consider the same economy, except that investment depends positively on income, so that I = 200 + .2Y. What is the level of income and multiplier now? c. Returning to the investment equation in Part a, suppose that the tax rate is increased to .4. What happens to income and to the multiplier? 7. Consider an economy described by the following equations: Y = C + I + G +X ' (Income identity) C = 400 + BK; (Consumption) X = 100 - .05Y (Net exports) with investment I = $300, government spending G = $100, and the tax rate t = .5. a. What is the level of income when spending balance occurs? What is the multiplier? Compare your answer to the multi- plier in Problem 4. b. Suppose government spending increases to $200. What is the new level of income

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