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Let us say that an economy has a consumption function given by C = 900 + 0.9Yd where Yd is the disposable income. There is a lump-sum tax of 90. Investment level is autonomous at 400 and government spending is also constant at 600.
(a) Find the equilibrium level of income
(b) What is the savings function?
(c) What is level of savings at equilibrium?
(d) Is the government's budget balanced at equilibrium?
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