In Macro Model #3 with government spending and taxation, suppose that the household consumption function is...

In Macro Model #3 with government spending and taxation, suppose that the household consumption function is given by C Y = + 100 .75 , desired investment and government spending by 100 each, and taxes by T T tY = +0 . Derive and graph aggregate expenditure for this economy as a function of constant taxes 0 T > 0 and the fractional income tax rate t >0. Use this aggregate expenditure function to find equilibrium real GDP for the case that 0 T = 80 and the income tax rate is t = .2 . What is the value of the income multiplier in this case?

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