Problem 2. You are given the following data for an economy: Consumption 20 + 0.8 Y4 %3D Investment I= 50 Government expenditure G = 20 Taxes T = 10 Find (a) equilibrium level of income. (b) If lump sum taxes increase by 10, (i) what is the equilihrium level of income, and (ii) lump sum tax multiplier ? (c) If government expenditure decreases by 10, what is (i) equilibrium level of income, (ii) Government expenditure multiplier ?

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