Consider the economy described by: Y = C + I + G + E - M YD = Y - T + TR C = 100 + 0.5*YD M = 100 + 0.175*Y T = 0.25*Y CA = E - M + TR DEF = G - T S = YD - C where TR=50; G=200; E=200; I=100. Use a spreadsheet to:

a) Compute the equilibrium level of output Y, and the corresponding levels for CA; DEF; and S

b) draw a diagram representing equilibrium between aggregate demand and supply c) Consider an increase in G, so that G*=250. Compute the new level of output Y, and the corresponding levels for CA; DEF; and S. Comment briefly on your result.