1.11. Congratulations. You’ve been appointed economic adviser to the president of Happyland. Your research assistant says the country’s mpe is .8 and autonomous expenditures have just risen by $20. (LO26W-2)

a. What will happen to income?

b. Your research assistant comes in and says he’s sorry but the mpe wasn’t .8; it was .5. How does your answer change?

c. He runs in again and says exports have fallen by

$10 and investment has risen by $10. How does your answer change?

d. You now have to present your analysis to the president, who wants to see it all graphically. Naturally you oblige.