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Given the following for the economy of a country:

(1) Consumption function: C=70+0.75Yd.

(2) Investment function: I=100.

(3) Government spending: G=60.

(4) Net export: NX=40.

(5) Net taxes: T=40.

(6) Disposable income: Yd Y-T.

(7) Equilibrium: Y=C+I+G+NX.

a. Solve for equilibrium income. (Hint: Be careful in doing the calculations. They are not difficult, but it is easy to make careless mistakes that produce very wrong results.)

b. What is the value of the spending multiplier?

c. If government purchases increase by 50, what is the new equilibrium level of income?