The consumption function (C), investment function (I), government expenditure function (G), and tax function (T) for a three - sector economy is shown below:

C = 200 + 0.75Yd

I = 100

G = 50

T = 20

The above terms are in million $.

i) Calculate the national income equilibrium for the economy. (3 marks)

ii) If the government decreases taxes by 10%, calculate the effect of the changes on savings, consumption and national income equilibrium. (7 marks)