Find the equilibrium level of GDP demanded in an economy in which investment is always $300, net exports are always -$50, the government budget is balanced with purchases and taxes both equal to $400, and the consumption function is described by the following algebraic equation:
C=150 + 0.75D
(Hint: Do not forget that DI=Y-T)
Explain how a shift from a government budget deficit to a budget surplus might affect the exchange rate.