Suppose a country has an initial equilibrium GDP of $1,500 billion, and the government is considering implementing a fiscal stimulus package to boost the economy. The government plans to increase government spending by $200 billion and reduce taxes by $100 billion. The marginal propensity to consume (MPC) is 0.8 and the marginal tax rate is 0.2.

a) Calculate the new equilibrium GDP after the implementation of the fiscal stimulus package.

b) Calculate the change in GDP that results from the fiscal stimulus package.

c) Calculate the government budget deficit/surplus resulting from the fiscal stimulus package.

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