Raise government spending

Assignment Help Business Economics

Reference no: EM137103

Assume the following open economy

C = 300 + 0.80(Y - 125)

I = 150

G = 250

X =115

M = 125+.05Y

a. Conclude the equilibrium level of income or GDP (Y).

b. Conclude the impact on income of a 50 increase in government spending from 250 to 300.

c. With the help of original data, calculate the impact of a 50 decrease in taxes from 125 to 75.

d. How much should it raise government spending, if the government looks to raise income to 3000?

Reference no: EM137103

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