Consider the following economy:(1) C = 1000 + 0.3 (Y - T)(2) I = 700(3) G = 500(4) T = 400Now that you know the new value for taxes from the previous question, i.e. to run a balanced budget. What is the new income of equilibrium?

To find the new income of equilibrium, we need to use the given equations and solve for the value of Y.

The equation for consumption (C) is given as C = 1000 + 0.3(Y - T), where T represents taxes. In this case, T is equal to 400.

Substituting the value of T into the consumption equation, we have C = 1000 + 0.3(Y - 400).

The equation for investment (I) is given as I = 700.

The equation for government spending (G) is given as G = 500.

To find the new income of equilibrium, we need to set the total output (Y) equal to the total spending (C + I + G).

So, Y = C + I + G.

Substituting the equations for C, I, and G, we have Y = (1000 + 0.3(Y - 400)) + 700 + 500.

Now, we can solve for Y by simplifying the equation:

Y = 1000 + 0.3Y - 120 + 700 + 500.

Combining like terms, we have Y = 1000 + 0.3Y + 1080.

Next, we can simplify further by subtracting 0.3Y from both sides:

0.7Y = 2080.

Finally, we can solve for Y by dividing both sides by 0.7:

Y = 2971.43.

Therefore, the new income of equilibrium is approximately 2971.43.