Question

if the national income equation is Y=C+I+G+E-M
where
C=8+0.6Yd
I=25
G=10
E=70
M=15+0.2Y
T=7+0.3Y
R=25-0.3Y
(a) determine the economy's national income/output
(b) determine the economy's multiplier applicable to government spending and interpret its meaning
(c) use the multiplier applicable to exports and explain how a $100 billion decline in the demand for exports could affect the following variables:
(i) GDP
(ii) Balance of trade
(iii) government budget