Suppose that for a particular economy and period, investment was equal to 200, government expenditure was equal to 100, net taxes were fixed at 150, and consumption (C) was given by the consumption...

Suppose that for a particular economy and period, investment was equal to 200, government expenditure was equal to 100, net taxes were fixed at 150, and consumption (C) was

given by the consumption function

C = 20 + 0.6YD

where YD is disposable income and Y is GDP.

 a. What is the level of equilibrium income (Y) ?

 b. What is the value of the government expenditure multiplier (Y>G) ? Of the tax

 multiplier (Y>T) ?

 c. Suppose the investment declined by 100 units to a level of 100. What will be the new

level of equilibrium income?