Suppose we have the following information for the simple (fixed r, fixed P, fixed W) Keynesian model.
C = 400 + 0.8
= 400 + 0.8 (Y - T)
I = 310
G = 140
T = 200, where C is the consumption function, (Y - T) is disposable income, I is investment, G is government spending, and T is taxes.
If government spending increased by $80, would equilibrium Y increase or decrease and by how much?