Let, C = 400 + 0.7 (Y T), T = 120 + 0.2Y, I = 500, G = 400, X = 100, M = 5 + 0.1Y. i. Determine equilibrium output and trade balance. ii. What will be the effect on equilibrium output and trade…

Let, C = 400 + 0.7 (Y-T), T = 120 + 0.2Y, I = 500, G = 400, X = 100, M = 5 + 0.1Y. i. Determine equilibrium output and trade balance. ii. What will be the effect on equilibrium output and trade balance when government expenditure decreases by Rs. 100 billions and tax rate increases by 5%? iii. Compute government expenditure and foreign trade multipliers.