Consider a hypothetical economy described by the following information:C = 500I = 100= 200T = 80mpc = 0.6Consider the same hypothetical economy described above but with additional information:t = 0.25TR= 50Task 2. Answer the following given the additional information above.A. Set up the new consumption function of this economy. Simplify.B. Compute for the new equilibrium income.C. Compute for the change in equilibrium income if the government increased its lump sum taxby 20.

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onsider a hypothetical economy described by the following information: C = 500 I = 100 G = 200 T = 80 трс 3D 0.6

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

Consider a hypothetical economy described by the following information:
C = 500
I = 100
= 200
T = 80
mpc = 0.6
Consider the same hypothetical economy described above but with additional information:
t = 0.25
TR
= 50
Task 2. Answer the following given the additional information above.
A. Set up the new consumption function of this economy. Simplify.
B. Compute for the new equilibrium income.
C. Compute for the change in equilibrium income if the government increased its lump sum tax
by 20.

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