The following model defines the current Canadian economy ($billions):

Consumption:C = 40 + .8Y^dwhere Y^dis disposable income.

Investment:I = 250

Government:G = 280

Taxes:T = .20Y

Exports:X = 400

Imports:IM = .30Y

Equilibrium:AE = Y

a)Calculate the equilibrium income and the income multiplier for the economy.

b) What is the level oftrade balanceandgovernment defictat the equilibrium income level?

c)For the economy in a), calculate the effect on national income if investment, I, increased by $20 billion.

d)For the economy in a), if full-employment income is $1600 billion, what is the size of the output gap?By how much would government spending have to change to bring the economy to full-employment?