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1. Describe the marginal propensity to consume and show how it is computed. 2. Discuss how spending and output influences equilibrium in a simple model

1. Describe the marginal propensity to consume and show how it is computed.

2. Discuss how spending and output influences equilibrium in a simple model where aggregate expenditure = consumption.

3. Describe how unplanned inventory can influence equilibrium in the model where AE=(C+I+G+(X-M))

4. Briefly describe the expenditure multiplier and state how it is computed. How is it different from the Tax multiplier?

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