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Calculate the national income equilibrium for economy

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Reference no: EM132639877

The consumption function (C), investment function (I), government expenditure function (G), and tax function (T) for a three - sector economy is shown below:

C = 200 + 0.75Yd
I = 100
G = 50
T = 20

The above terms are in million $.

i) Calculate the national income equilibrium for the economy.

ii) If the government decreases taxes by 10%, calculate the effect of the changes on savings, consumption and national income equilibrium.

Reference no: EM132639877

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