A government is added to the original (I = 50) economy from part (2). The governmentspends 100 and receives taxes of 100 (such that the government budget is balanced with nodeficit.) The economy is now described by: C = 150 + 0.60(Y-T) = 150 + 0.60(Y-100) I = 50 G = 100
a) What is the equilibrium output?
b) Full employment output in this economy is 800. Suppose government spending is raisedto attain this level of income, but taxes are not changed. What level of governmentspending will result in an equilibrium output of 800