Calculate the equilibrium level of income

Reference no: EM132139620

Question: Consider the following parameters that describe an economy: C = 50 + 0.8YD I = 70 G = 200 TR = 100 t = 0.2

a. Calculate the equilibrium level of income and the multiplier in this model.

b. Calculate the budget surplus in this model.

c. Suppose that the tax rate, t, increases to 0.25. What is the new equilibrium income? The new multiplier?

d. Calculate the change in the budget surplus.

Reference no: EM132139620

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