For the economy described in problems 3 and 4, find the effect on short-run equilibrium output of

a. An increase in government purchases from 1,500 to 1,600.

b. A decrease in tax collections from 1,500 to 1,400 (leaving government purchases at their original value).

c. A decrease in planned investment spending from 900 to 800.

Take as given that the multiplier for this economy is 2.5. If you have studied Appendix B in this chapter, show why this is so. LO4