How much would they have to cut taxes

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Suppose the business confidence also depends on the level of deficit spending. in other words the larger the federal governments deficit the less money the firm will invest. mathematically this economy can be expressed as follows. C=100+.9Yd AE= C+I+G I=500-.2D G=500 T=500 A) Where D is the size of the deficit. solve the equilibrium income and graph this economy. B) Now suppose full employment equlibrium is 15,000. By how much would the government have to increase government spending to reach full employment? By how much would they have to cut taxes? are you surprised by your findings?

Reference no: EM131245401

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