Assume an Economy represented by the following equations:
Y=1,200
C=500+0.5(Y-T)
1=200-10r
G=300, T=400.
As a leading economist in the country, you have to use the Classical model with fixed income (Chapter 3) to analyze the Economy....
Question: If government increases taxes, T, from 400 to 500, equilibrium level of investment, I, will become?
O 100
O 50
O 150
O 75