Consideran economy described by the following functions: C = 20 +0.80Y, I = 30, G = 50, TR = 100 (a) Find theequilibrium level of income and the autonomous expenditure multiplierin the model. (b) If government expenditure increases by 30, what isthe impact on equilibrium income? (c) If a lump-sum tax of 30 isadded to pay for the increase in government purchases, how willequilibrium income change?

Consideran economy described by the following functions: C = 20 +0.80Y

1.	Consideran economy described by the following functions: C = 20 +0.80Y, I = 30, G = 50, TR = 100 (a) Find theequilibrium level of income and the autonomous expenditure multiplierin the model. (b) If government expenditure increases by 30, what isthe impact on equilibrium income? (c) If a lump-sum tax of 30 isadded to pay for the increase in government purchases, how willequilibrium income change?
Answer» Consider an economy described by the following functions: C = 20 + 0.80Y, I = 30, G = 50, TR = 100 (a) Find the equilibrium level of income and the autonomous expenditure multiplier in the model. (b) If government expenditure increases by 30, what is the impact on equilibrium income? (c) If a lump-sum tax of 30 is added to pay for the increase in government purchases, how will equilibrium income change?