For this question, consider that the letter “A” denotes the last 4 digits of your student number. That is, for example,

[answerhappygod]

For this question, consider that the letter “A” denotes the last
4 digits of your student number. That is, for example, if your
student number is: 22562031, then A = 2031. Assume that the factors
affecting the aggregate expenditures of the sample economy, which
are desired consumption (C d ), taxes (T), government spending (G),
investment (I d ) and net exports (NXd ) are given as follows:
C d = A + 0.6 YD,
T = 100 + 0.2Y,
G = 400, I d = 300 + 0.05 Y,
NXd = 200 – 0.1Y.
(a) According to the above information, explain in your own
words how the tax collection changes as income in the economy
changes?
(b) Write the expression for YD (disposable income).
(c) Find the equation of the aggregate expenditure line. Draw it
on a graph and show where the equilibrium income should be on the
same graph.
(d) State the equilibrium condition. Calculate the equilibrium
real GDP level.
(e) What is the value of expenditure multiplier in this economy?
If the government expenditure increases by 100 (i.e. ΔG=100), what
will be the change in the equilibrium income level in this economy?
What will be the new equilibrium level of real GDP?
(f) Suppose that the output gap is given as “-2000”. Explain
what is output gap. Given this information, what is the level of
potential GDP? How much should government change its spending (i.e.
ΔG=?) to close the output gap?