The goods market of a closed economy obeys the following equation system: C = 50 + 0.9(Y −T) Z = C + I + G,
with the given exogenous values
I = 100, G = 600, T = 500.
a)Determine the equilibrium values for output at Y = Z, for C, and for disposable income Y −T = YD. Evaluate the fiscal multiplier.
b)This equilibrium is unsatisfactory, as government expenditures exceed revenues and thus public saving is negative. Determine the values for G and T that are required to fulfill the condition G = T and nevertheless keep output Y at the same level. Evaluate C and YD.
c)Suppose the government now increases G as well as T by the same amount, say by 100. By how much does Y change if at all? The corresponding value ∆Y/∆G is called the balanced-budget multiplier.
d)Now re-consider the original economy in (a), i. e. without assuming G = T, but assume that taxes T depend on output T = 0.2Y. Determine the fiscal multiplier for this modified model.

Astudent was asked to draw a demand and supply graph to illustrate the effect on the market for premium bottled water of a fall in the price of electrolyteselectrolytes used in some brands of premium bottled​ water, holding everything else constant. she drew the graph to the right and explained it as​ follows: ​"electrolyteselectrolytes are an input to some brands of premium bottled​ water, so a fall in the price of electrolyteselectrolytes will cause the supply curve for premium bottled water to shift to the right​ (from upper s 1s1 to upper s 2 right parenthesis .s2). because this shift in the supply curve results in a lower price left parenthesis upper p 2 right parenthesis commap2, consumers will want to buy more premium bottled water and the demand curve will shift to the right​ (from upper d 1d1 to upper d 2 right parenthesis .d2). we know that more premium bottled water will be​ sold, but we​ can't be sure whether the price of premium bottled water will rise or fall. that depends on whether the supply curve or the demand curve has shifted farther to the right. i assume that the effect on supply is greater than the effect on​ demand, so i show the final equilibrium price left parenthesis upper p 3 right parenthesisp3 as being lower than the initial equilibrium price left parenthesis upper p 1 right parenthesis .p1.​" where is the flaw in the​ student's argument? supply will shift inward. demand will not shift. demand will shift inward.