Consumption function:C = 85 + 0,5YdInvestment function:I = 75 Government spending:G = 70 Net Taxes:T = 0,25Y Disposable income:Yd Y – T Equilibrium:Y = C + I + G You are given the following model for the economy of a country without a foreign sector:(d) Solve for equilibrium income. (Hint: Be very careful in your calculations. They are not difficult, but it is easy to make careless mistakes that produce dramatically wrong results.)(e) How much does the government collect in taxes when the economy is in equilibrium?(f) What is the government’s budget deficit or surplus?

At Equilibrium Income level in an economy, the aggregate demand and aggregate supply are equal to…

Answered: Consumption function: C = 85 + 0,5Yd…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

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Chapter1: Making Economics Decisions

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Problem 1QTC

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Consumption function:	C = 85 + 0,5Yd
Investment function:	I = 75
Government spending:	G = 70
Net Taxes:	T = 0,25Y
Disposable income:	Yd Y – T
Equilibrium:	Y = C + I + G

You are given the following model for the economy of a country without a foreign sector:

(d) Solve for equilibrium income. (Hint: Be very careful in your calculations. They are not difficult, but it is easy to make careless mistakes that produce dramatically wrong results.)
(e) How much does the government collect in taxes when the economy is in equilibrium?
(f) What is the government’s budget deficit or surplus?

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