Recalculate equilibrium level of gdp using tax multiplier

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With fixed government expenditures of G = 150 and fixed taxes of of T= 200. Assume that that consumers behave as described in the following consumption function:
C= 150 + .75(Y-T)

Suppose further that investment spending is fixed at 100. Calculate the equilibrium level of GDP. Solve for equilibrium levels of Y, C, and S

Next assume taxes were reduced by 20 to a level of 180. Recalculate the equilibrium level of GDP using tax multiplier. solve for equilibrium levels of Y, C and S, after the tax cut.

Reference no: EM13239054

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