Table 1 shows the Consumption, Savings and Tax schedule for a series of gross income.

Table 1: Consumption, Savings and Tax

Gross Income (Y)	Consumption (C)	Savings (S)	Tax (T)
0	100	-100	0
500	(a)	142.50	25
1000	665	(b)	50
(c)	1,330	570	100
4,000	(d)	(e)	200

a = 100 (b) b = 0.142 (c) c = 0 (d) d = 0 (e) e = 0.

Tax Rate = 5%

1) If Investment is RM1,250, government spending is RM950 and next export is RM1,050, based on your answers in Part b above, using the Aggregate Expenditure (AE) model, compute the equilibrium national income.

2)What is the government budget balance when the economy is at equilibrium? Is the government running a budget surplus or deficit?

3)Consider that the full-employment income is at RM8,000. How should the government alter its spending so that the current level of equilibrium national income falls to the full-employment level?

NOTE: NOTE: Kindly solve the answers inside Coursehero or on a word document and then screenshot it and attach, please do not write on a piece of paper with ink.