(Solved): Suppose MTR = 0.3 and G = $300 million for the economy of White Forest. 1. At what level of GDP ...

Suppose MTR = 0.3 and G = $300 million for the economy of White Forest.

1. At what level of GDP will White Forest have a balanced budget?

2. At what level of GDP will White Forest have a budget surplus of $60 million?

3. What is the balance of the government budget if the level of GDP is $900 million?

Solution:

$1,000 million

$1,200 million

Deficit of $30 million