1. At the same time, the government increases taxes by $500 and decreases spending by $600. What will be the net effect of these actions on GDP? (Using the scenario below)

Scenario: Your income increases from $1,200 to $2,200, and your consumption increases from $1,100 to $1,850.

1. Calculate the MPC.
2. Calculate the MPS.
3. Using the MPS & MPC from #1 & 2, calculate the:
   1. Government spending multiplier
   2. Tax multiplier