Question: [National Income Analysis - I]

Let the national income model be

\(Y=C+{{I}_{0}}+G\)

\(C=100+0.75\left( Y-{{T}_{0}} \right)\)

\(G=0.1Y\)

1. Find the equilibrium national income.
2. Consider the general form
   \(Y=C+{{I}_{0}}+G\)
   \(C=a+b\left( Y-{{T}_{0}} \right)\)
   \(G=gY\)
   where a > 0, 0 < b < 1 and 0 < g < 1. Give economic meaning of the parameter g.
3. Find the equilibrium national income.
4. What restriction on the parameters is needed for a solution to exist?

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