Westion ISuppose the consumption function is C = 100 + 0.8(Y-T), that investments are 60, that government spending is 200, and that taxes are proportional to incomea) What is the equilibrium GDP as a function of t?b)What is the government spending multiplier? Does it increase with an increase in taxes (increase in rc)If r, what is the equilibrium GDP? What is the government's budget surplus/deficit?
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