1) C = 300 + 0.75 (Y-T), T = 100, I = 475, G = 150.
i) Exogenous variables: T, I;
Endogenous variables: C, Y.
ii) Solve for the equilibrium value for all the endogenous variables.
Y = C + I + G,
Y = 300 + 0.75(Y - 100) + 475 + 150,
Y = 850 + 0.75Y,
0.25Y = 850,
Y = 3400.
C = 300 + 0.75(3400 - 100) = 2775.
iii) If G = 150 + 50 = 200, then:
Y = 300 + 0.75(Y - 100) + 475 + 200,
Y = 900 + 0.75Y,
0.25Y = 900,
Y = 3600.
C = 300 + 0.75(3600 - 100) = 2925.
2) Y = C + I + G + (X - M), X = 20,
C = 20 + 0.8Yd, M = 4 + 0.3Y, T = 30, Yd = Y - T, G = 22, I = 30, so:
Y = 20 + 0.8(Y - 30) + 30 + 22 + (20 - 4 - 0.3Y),
Y - 0.8Y + 0.3Y = 64,
0.5Y = 64,
Y = 128.
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