I was wondering if someone could help me do this question as its quite urgent and i dont know where to begin
A simple income model is given by
Y = C + I* + G*
C = a + bY (a > 0 and 0 < b < 1)
for some constants a and b and where I*, G* are exogenous variables.
Show that the relationship between equilibrium C and G* is linear.
Deduce the change in C if G* increases by 1 unit.