Consider the following model:
C= 1500+MPC(Y-tY)
I=800
G=500
X-M=500+MPI(Y)
Where:
t=the (flat) tax rate
MPC=the marginal propensity to consume
MPI=the marginal propensity to import
Suppose MPC=.80, t=.25, MPI=.2
1. Given the information above solve for the equilibrium output