Problem Given the following information about the economy of a country. C = 85 + 0.5 Y I = 85 Consumption functicn Investment function %3D Government spending = 60 Net Taces T = 40 + 0.25 Y (i) Solve for equilibrium income and consumption. (ii) How much does the government collect in net taxes when the economy is in equilibrium . iii) What is the government's budget deficit or surplus ?

Problem Given the following information about the economy of a country. C = 85 + 0.5 Y I = 85 Consumption functicn Investment function %3D Government spending = 60 Net Taces T = 40 + 0.25 Y (i) Solve for equilibrium income and consumption. (ii) How much does the government collect in net taxes when the economy is in equilibrium . iii) What is the government's budget deficit or surplus ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Problem
Given the following information about the economy of a country.
Consumption function
C = 85 + 0.5 Ya
Investment function
Government spending
I = 85
G = 60
Net Taces
T = 40 + 0.25 Y
(i) Solve for equilibrium income and consumption.
(ii) How much does the government collect in net taxes when the economy is in equilibrium ?
(iii) What is the government's budget deficit or surplus?

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