Suppose the UK economy is a closed economy represented by the following equations:

C = 400 + 0.4YD T = 600 I = 300 G = 2000 YD = Y - T

a)Given the above variables, calculate the equilibrium level of output. (4 marks)

b)Now, assume that government spending increases from 2000 to 2100. What is the new equilibrium level of output? How much does income change because of this event? (4 marks) please answers both questions with harvard style citations and references in two hundard to two hundard 250 words