An economy can be described as follows:
C = 100 + 0.8Yd
I = 150 - 6i
T = 0.25Y; G = 100
Md = 0.2Y - 2i
Ms = 150
a) Find aggregate output (Y) and the rate of interest (i) in this economy
b) Is the government's budget balanced, in surplus or deficit?
c) If full-employment output is 830 and the Fed increases the money supply from 150 to 160, will economy achieve equilibrium at full employment? Prove your answer.
d) How much has investment spending changed?