Given the following model for an economy C = 100 + 0.8Yd G = 800 T = 500 I = 200 d)      Find Tax multiplier. e)       Find the new level of output if the lump-sum tax is increased by 100 (ΔT = 100). f)        Find the new level of output if the government spending is increased by 100 and this government expenditure increase is financed by the same amount of increase in lump-sum taxes (ΔG = ΔT = 100).

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Question: Given the following model for an economy

C = 100 + 0.8Yd

G = 800

T = 500

I = 200

d)      Find Tax multiplier.

e)       Find the new level of output if the lump-sum tax is increased by 100 (ΔT = 100).

f)        Find the new level of output if the government spending is increased by 100 and this government expenditure increase is financed by the same amount of increase in lump-sum taxes (ΔG = ΔT = 100).

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