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The functions of economy s components are given as below : C = 0 . 8 Yd + 1 , 0 0 0 T =

The functions of economys components are given as below : C =0.8Yd +1,000 T =0.25Y +500 G =1,500 M =0.1Y +1,000 X =400 I =500 Compute the eqm output. How is the govt budget? Use the multiplier to compute the new eqm output when the govt rises by 100. Do you have any comments on the govt budget? If the govt doesnt change G, how much T will be decreased to achieve the same level output in question (b). From the question (a), If the govt increases T and G each by 100 how much will the eqm output change? Which kind of the above fiscal policies you support most? Why?

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