You know that autonomous consumption is $250 billion, that disposable income is $500 billion (assume taxes are equal to zero), and that the MPC is 0.8. Using these figures:

a) Calculate the level of consumption spending.

b) Given only the information provided, what is the equilibrium level of income?

c) Suppose the general mood is that the economy will expand and that economic prospects are rosy. On the basis of this optimism, autonomous consumption increases from $250 billion to $400 billion. Now what is the equilibrium level of income?

d) Does this change in income in part

(c) also change the MPC? Why or why not?