1.According to classical economic theory, a market economy is self-regulating and will automatically adjust to Natural GDP. Explain by giving a specific example.

2.Discuss, according to Keynesian theory, a change in one of the components of Total Expenditures will lead to a multiplied change in Real GDP!

3.What assumptions make laissez-faire the proper macroeconomic policy?

4.When disposable income increases from $14,500 to $18,700, consumption increases from $12,300 to $15,240. Compute the marginal prosperity to consume.

5.Explain what automatic stabilizers are and give two examples of automatic stabilizers.