The equations below should be used to answer Question #7. The equations describe the expenditures within Country X and we'll assume that they conform to the assumptions we've made in lecture regarding the fixed price level Aggregate Expenditure model. All values for expenditure and income are dollar amounts, but for simplicity, we've dropped the $ below.

C = 0.8(DI) + 1600 (C = consumption expenditures, DI = disposable income) I = 2000 (I = investment expenditure) G = 1000 (G = government expenditure) X = 1800 (X = spending on exports) M = 1600 (M = spending on imports) DI = Y - T (Y = real GDP, T = tax revenues) T = 1000

Assume that you want to increase equilibrium GDP by $4000, but must maintain a balanced budget. In this situation, what would be the changes in government expenditure (G) and taxes (T)? (note that you must get both answers below correct to get credit for this question)

The change in G would need to be_____ and the change in T would be_______.