Question: 2. Now let's add taxes into the model. Suppose that in the economy described in Problem 1 above, the Government now imposes a simple proportional

2. Now let's add taxes into the model. Suppose that in the economy described in Problem 1 above, the Government now imposes a simple proportional income tax of 3%. The model now becomes: C = 100,000 + .92Yd I= 40,000 G = 25,000 Yd = Y T T= .03Y C, I and G are as before; Yd is disposable income and T is the economy's tax bill. a. What is the equilibrium level of aggregate output for this economy? b. What is the saving function for this economy

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