If: C=100+0.75YD, G=T=400, I=200,And Xn=300-0.15y.
1. calculate the value of equilibrium income/expenditure.
2. at equilibrium what is the amount of the budget deficit/surplus?
3. what is the value of XN at equilibrium?
4. what is the value of marginal propensity to expand (MPE)? what is the value of the multiplier in this economy? what factors will determine the increase in the multiplier of this economy.
5. suppose government takes a fiscal policy of increasing both its spending(G) and autonomous taxes(T) by $80 billion. calculate the new equilibrium income.
6. is this fiscal policy neutral? can you explain this intuitively?