Question: Solve for the equilibrium level of output in the following two scenarios: there isan income tax t=0.1, The income tax would result in the total amount of tax to be the lump sum tax and the income tax rate on income when t=0.1t=0.1 Y=−5+0.5(Y−250−0.1Y)+200+300+50'   =−5+0.5(0.9Y−250)+550  =−5+0.45Y−125+550    =0.45Y−420 0.55Y=420Y=420 0.55=763.636≅763.64   Please explain this solution.  Where does the 0.45Y come from?

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