** Please do not copy and paste this question from another answers question because it is already incorrect** Question 2:

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** Please do not copy and paste this question from another answers
question because it is already incorrect**
Question 2: The following information is given for an open
economy. C= 40 + 0.75 (Y-T), I=80, G=50, and T=60 Imports and
exports are given by: IM =0.25Y and X=0.3Y* Foreign income (Y*)
=700
a) Solve for equilibrium output in the domestic economy.
b) Solve for the trade balance. Does the country have a trade
surplus or deficit? How much?
c) Draw representative graphs of the goods market and
net-exports. Draw your graphs to illustrate the trade balance at
the equilibrium level of output.
d) What happens to equilibrium output and the trade balance if
government expenditures increase to 100? Show the impact of this
change on the graphs that you drew in part c.
e) What is the status of the government budget (deficit/surplus)
before and after the expansionary fiscal policy?