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Consider a close economy with the following consumption and tax function C = C0 + bY D , T = T0 + tY
(a) Identify the endogenous and exogenous variables and the parameters
(b) Assume I0 = 60, G0 = 50, C0 = 55, T0 = 10, b = 0.95, and t = 0.15
(I) Find the equilibrium national income, consumption, and tax
(II) What is the MPC? What is the value of multiplier?
(III) Is government budget in this economy balanced? If not, what is the amount of deficit or surplus?
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