I Have The Following Information About An Economy C 50 0 8 Y D Consumption Funct

I have the following information about an economy:

C = 50 + 0.8*Yd                                               Consumption Function

I = 100                                                           Investment Function

G = 130                                                           Government Spending

T = 0.1*Y                                                        Taxes

Yd = Y – T                                                        Disposable Income

1.    Show that if Y = AE then I + G = S + T where S is saving.

2.    What is the Government Budget position (G – T) when the economy is at the equilibrium level of GDP?

3.    If government increases spending from 130 to 186 what happens to equilibrium GDP? to the government budget balance?

 

"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"