You are given the following income-expenditure model for the economy of Jitra

C=200 +0.8%

T= 50

G=100

I = 140

Where C, T, G, I, and Yd represent consumption, tax, government spending, investment, and disposable income, respectively.

• Derive the aggregate expenditure function and the saving function
• Calculate the equilibrium level of income and consumption in Jitra
• Based on your answer in b(iii), compute the new level of equilibrium income if the government spending increases to 150.
• Is this economy experiences a budget deficit, budget surplus or balanced budget? Explain your answer.

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Given C 200 00 Ya T 50 G100 I 140 E xpenditure func... View the full answer