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Suppose the economy of Ansonia is described by the following: C=400+0.6Yd, T=600, G=800, I=500 (a) Calculate...

Suppose the economy of Ansonia is described by the following:

C=400+0.6Yd, T=600, G=800, I=500

(a) Calculate the equilibrium level of output. Graph your solution.

(b) If the government spending increases by 200 what is the new equilibrium level of output? Use the government spending multiplier.

(c) If the government increases taxes by 200 what is the new equilibrium level of output? Use the tax multiplier.

(d) If the government increases taxes and spending by 200 what is the new equilibrium level of output?

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