1) What is the consumption function if,AutonomousConsumption equals 70, theMarginal Propensity to Save (MPS)is 0.1,Lump-Sum Taxesare 10, andTransfer Paymentsare 20?

2) a) Assume there is a recessionary gap. How will the economy self-adjust to reach long-run equilibrium?Bespecific.

b)Why might it not be a good idea to wait for the economy to self-correct?

Assume that the MPC is 0.75. Show work

3) a)How much will GDP change by if Government Spending increased by 200?

Assume that the MPC is 0.75. Show work

b)How much would GDP change by if Lump-Sum Taxesdecreasedby 200?

4) Assume there are no transfer payments (TR = 0). Autonomous consumption (a) is 500, the Marginal Propensity to Consume (MPC) is 0.8, lump-sum taxes are 10 (T = 10), Government Spending (G) is 50, Planned Investment is 100, and Net Exports (NX) are -20. What is equilibrium GDP? Round to two decimals.