Seatwork on Fiscal Policy Given: Initial Consumption at Zero Disposable Income (b) = 75 Marginal Propensity to Consume (c) = .75 Level of Taxes if Y = 0 (s) = 25 Investment (I) = 20 Government Expenditures (G) = 30 Marginal Propensity to Tax (t) = .25 Questions: 1. Calculate the equilibrium level of income using the model Y = C + I + G. 2. Determine the size of the new multiplier (tax multiplier) for this economy.

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