1.12. Congratulations again. You’ve just been appointed economic adviser to the president of Examland. The mpe is .6; autonomous investment is $1,000; autonomous government spending is $8,000; autonomous consumption is $10,000; and autonomous net exports are $1,000. (LO26W-2)

a. What is the equilibrium level of income in the country?

b. Autonomous net exports increase by $2,000. What will happen to income?

c. You’ve just learned the mpe changed from .6 to .5.

How will this information change your answers in a and b?