Final answer:
The question involves applying concepts of the consumption function to economic variables such as income, consumption, and taxes, for the purpose of calculating consumption and understanding policy implications for achieving economic equilibrium.
Step-by-step explanation:
When income, Y, equals 1000, consumption, C, equals 750, and taxes, T, equal 150, we are dealing with an economic scenario where these variables interact based on consumption function formulas.
The consumption function can be expressed as C = Consumption when national income is zero + MPC (after-tax income). Given the formulas provided such as C = $20+0.9(Y - T), we can find the level of consumption that will occur when income is zero and calculate the Marginal Propensity to Consume (MPC) on after-tax income.
For policy-related issues, to achieve full employment level or equilibrium, government spending levels or tax rates might need to be adjusted. Using the given economic parameters, one can determine these adjustments.
For example, with T = Taxes = 0.3Y and C = Consumption = 200+ 0.9(Y - T), you could calculate the optimal levels of government spending or taxation necessary to reach the desired level of national income.