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# Assume the following open economy C = 300 + 0.80(Y - 125) I = 150 G = 250 X =115 M = 125+.05Y a. Determine (solve for) the equilibrium level of...

Assume the following open economy

C = 300 + 0.80(Y - 125)

I = 150

G = 250

X =115

M = 125+.05Y

a. Determine (solve for) the equilibrium level of income or GDP (Y).

b. Determine the impact on income of a 50 increase in government spending from 250 to 300.

c. Using the original data, compute the impact of a 50 decrease in taxes from 125 to 75.

d. If the government seeks to raise income to 3,000, how much should it raise government spending?

1. (15 points) Assume the following open economy for Questions 1a, 1b, 1c and 1d below:
C = 300 + 0.80(Y – 125)
I = 150
G = 250
X =115
M = 125+.05Y
1a). Determine (solve for) the equilibrium...

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