Consider the three-sector macroeconomic model Y = C + I + G C = aY d + b (0 < a < 1, b > 0) Yd = Y T T = T* (T* > 0) I = I* (I* > 0) G = G* (G* > 0) (a) Show that

(b) Write down expressions for the government expenditure multiplier, Y/G*, and the taxation multiplier, Y/T*, and deduce that if both government expenditure and taxation increase by 1 unit, then the equilibrium value of income also rises by 1 unit, irrespective of the value of a. (c) State the value of the balanced budget multiplier.