Problem Given the following information about the economy of a country. C = 85 + 0.5 Y I = 85 Consumption functicn Investment function %3D Government spending = 60 Net Taces T = 40 + 0.25 Y (i) Solve for equilibrium income and consumption. (ii) How much does the government collect in net taxes when the economy is in equilibrium . iii) What is the government's budget deficit or surplus ?

Problem Given the following information about the economy of a country. C = 85 + 0.5 Y I = 85 Consumption functicn Investment function %3D Government spending = 60 Net Taces T = 40 + 0.25 Y (i) Solve for equilibrium income and consumption. (ii) How much does the government collect in net taxes when the economy is in equilibrium . iii) What is the government's budget deficit or surplus ?

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section11.B: Algebraic Treatment Of Taxes And Fiscal Policy

Problem 3TY

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