Assume the following for the economy of a country:

a. Consumption function: C = 50 + 0.85Y_d

b. Investment: I = 80

c. Government spending: G = 50

d. Disposable income: Y_d = Y - T

e. Net taxes: T = –10 + 0.1Y

f. Equilibrium: Y = C + I + G

Solve for equilibrium income. (Be very careful in doing the calculations. They are not difficult, but it is easy to make careless mistakes that produce wrong results.) What happens to the economy when the marginal propensity to save increases to 0.2?