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Suppose we have a hypothetical economy with the following characteristics: C = a + 0.8Yd, I = 100, G = 150, What is the equilibrium level of income in a 2 sector, and 3sector economy without taxation. If the 2 sector economy desires to double output, by how much must investment increase to achieve the desired level of output? If the government introduces tax in a 3sector economy to the tune of 20m, what will be the new equilibrium level of income for the 3 sector economy? How does this differ from the 3 sector solution in (I) above. If there is an increase in investment by 50%, how will the NI be impacted? If the economy becomes open with the introduction of the external sector such that export (X) = 100 and import (M) = 150, calculate the equilibrium income in a 4 sector model. If the value of export doubles in (IV) above, what will be the value of equilibrium income? Using the answers from (iv) and (v) above, comment on the effect of net exports on the
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