The total value of spending in the US will just equal all spending on component pieces and we will call the value of total production in the economy national income (Y):Total domestic spending = C+I+G

Total domestic production = YWhen planned spending just equals planned production we will be in equilibrium in the economy and production will just equal income. Let T represent taxes then we could write our economic condition as:Y = C(Y-T) + I(Y) + GNow suppose our consumption function is: C = $500 + .75(Y-T)

Our investment function is: I = $50 + .1Y

Government Spending is: G = $300

Taxes are: T = $200Using the above equilibrium condition solve for the level of national income (Y). Then find the level of consumption spending the level of investment spending and the government surplus or deficit in this economy. What is the value of the derivative dC/d(Y-T)? How would you interpret this derivative?