I'm just asking for question c, not a or b An economy is described by the following equations:Y = C+ I, +GC = a + b(Y –T)%3DT = tY%3DLet a = 20, b = 0.75, t 0.25, I,100, G = 240%3D%3D(a) Determine the value of the multiplier for this economy, and find the equilibriumvalue of Y.(b) Find the values of C, T and G-T, given your answer to part (a).(c) Describe what would happen if the government tried to eliminate its budget deficitby undertaking a cut in G equal to the current value of G-T.HTML EditormB IUA工三三三 x x, 三田T 1 12pt•ParagrapII

Y = C + I + G C = a + b(Y - T) T = tY a = 20 b = 0.75 t = 0.25 I = 100 G = 240 C = a + b(Y - T) C =…

Answered: (c) Describe what would happen if the…

(c) Describe what would happen if the government tried to eliminate its budget deficit by undertaking a cut in G equal to the current value of G-T.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter2: Mathematics For Microeconomics

Section: Chapter Questions

Problem 2.4P

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Question

I'm just asking for question c, not a or b

An economy is described by the following equations:
Y = C+ I, +G
C = a + b(Y –T)
%3D
T = tY
%3D
Let a = 20, b = 0.75, t 0.25, I,
100, G = 240
%3D
%3D
(a) Determine the value of the multiplier for this economy, and find the equilibrium
value of Y.
(b) Find the values of C, T and G-T, given your answer to part (a).
(c) Describe what would happen if the government tried to eliminate its budget deficit
by undertaking a cut in G equal to the current value of G-T.
HTML Editorm
B IUA
工三三三 x x, 三
田
T 1 12pt
•Paragrap
II

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