Question: Suppose C =$35 +0.80Yd, I = $70, G = $65, Tx = 0.10Y. (i) Find the equilibrium output, (ii) What are the tax revenue

Suppose C =$35 +0.80Yd, I = $70, G = $65, Tx =

Suppose C =$35 +0.80Yd, I = $70, G = $65, Tx = 0.10Y. (i) Find the equilibrium output, (ii) What are the tax revenue at equilibrium output? Does the government have a balanced budget? (iii) Find the equilibrium output when investment increases from $70 to $90, (iv) What has happened to the relationship of government teat spending and tax revenues? Why?

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