1. Assume that the Palestinian Government uses balanced budget. It decreases taxes by NIS 100 million and increases spending by NIS 100 million and the marginal propensity to consume (MPC) = 0.75. As a result, the GDP will: (a) Stay the same. (c) Increase by NIS 75 million. (b) Increase by NIS 800 million. (d) Increase by NIS 100 million. 2. Considering the graph below, at the level of income Y=1,200, we would expect: AE AE Output (GDP) (Y) 500 1000 1200 (a) Inventory to rise, and then production, employment, and GDP to rise. (b) Inventory to fall, and then production, employment, and GDP to fall. (c) Inventory to rise, and then production, employment, and GDP to fall. to fall, and then production, employment, and GDP to rise