Consider the following economy:(1) C = 1000 + 0.3 (Y - T)(2) I = 700(3) G = 500(4) T = 400Given what you know from the previous question, i.e. the government is changing spending to reach balanced budget. Find the new income of equilibrium.

To find the new income of equilibrium, we need to use the given equations and information.

First, let's recall the equation for aggregate demand (AD):

AD = C + I + G

where C represents consumption, I represents investment, and G represents government spending.

From equation (1), we know that consumption (C) is equal to 1000 + 0.3(Y - T), where Y represents income and T represents taxes.

From equation (2), we know that investment (I) is equal to 700.

From equation (3), we know that government spending (G) is equal to 500.

From equation (4), we know that taxes (T) are equal to 400.

Now, let's substitute these values into the aggregate demand equation:

AD = (1000 + 0.3(Y - 400)) + 700 + 500

Simplifying this equation, we get:

AD = 2200 + 0.3Y - 120

Next, we need to find the equilibrium income, which is the level of income where aggregate demand equals aggregate supply. In other words, we need to find the value of Y that makes AD equal to Y.

Setting AD equal to Y, we have:

Y = 2200 + 0.3Y - 120

Simplifying this equation, we get:

0.7Y = 2080

Dividing both sides by 0.7, we find:

Y = 2971.43

Therefore, the new income of equilibrium is approximately 2971.43.