Here are the solutions to Question 3: i. Find the equilibrium income The equilibrium condition is $Y = AE$, where $Y$ is the national income and $AE$ is the aggregate expenditure. Given: Consumption function: $C = 200 + 0.8Y$ Investment: $I = 50$ Government Spending: $G = 60$ Aggregate Expenditure: $AE = C + I + G$ (assuming $(X-M)=0$ as no information is provided for net exports) Step 1: Substitute the given values into the aggregate expenditure equation. $$AE = (200 + 0.8Y) + 50 + 60$$ $$AE = 310 + 0.8Y$$ Step 2: Set $Y = AE$ to find the equilibrium income. $$Y = 310 + 0.8Y$$ Step 3: Solve for $Y$. $$Y - 0.8Y = 310$$ $$0.2Y = 310$$ $$Y = \frac{310}{0.2}$$ $$Y = 1550$$ The equilibrium income is $\boxed{\text{1550}}$. ii. Derive the government spending multiplier and explain its economic implications Step 1: Identify the marginal propensity to consume (MPC). From the consumption function $C = 200 + 0.8Y$, the MPC is the coefficient of $Y$, which is $0.8$. Step 2: Calculate the government spending multiplier ($k_G$). The formula for the government spending multiplier is: $$k_G = \frac{1}{1 - \text{MPC}}$$ $$k_G = \frac{1}{1 - 0.8}$$ $$k_G = \frac{1}{0.2}$$ $$k_G = 5$$ The government spending multiplier is $\boxed