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2) Given the following information, and assuming fixed prices: C-25 +0.9Yd 1125 -0.20 G50 a) Solve for the equilibrium level
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ANSWER (a) = 2510.94d IF 125 fr 0.20 G So Y- & IfG = 251 0.9 (4-0.20) + 125+ 50 4 z 200+ 0.94.-018 4-0942 199.82 - 199.82 01spending increased by ( lo So new Government If government spending is so tlo= 60 Y = CA II G. CF 25t6.94d IF 125 to 0 20 G=(e) if tax rate Change to 0 25 Y=0 2510.914- 025) + 125 + 50 4 = 200 40.94 - 0:2250 4-0.94 - 199.775 0.12 199.775 42 199.775

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