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Proportional income tax rate

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Given the following functions: C = 1 000 + 0,4Y, G = 400 and I = 100, suppose there is a change ir government expenditure from R400 to R500 but the proportional income tax rate remains 40%. Whal will the equilibrium level of income Y be? (Hint: Round off the answer in question 19 to two digits after the decimal to obtain the answer for question 3.20.)

[1] 2112

[2] 2000

[3] 1 848

[4] 1 452p

Reference no: EM131198027

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