a) Using Disney World in Orlando as an example, explain the multiplier. What are the three things that influence the multiplier, and explain how they impact the number?

b) If the MPC is .9 and there are no leakages to the economy, what will the multiplier be? If there is a recessionary gap of $40m, how much money would the government have to inject into the economy to bring it back to long-run equilibrium?

c) To eliminate the recessionary gap, the government decides to cut taxes instead of increasing spending. The amount of the tax cut is the same as what would have been injected in part b). Will the decrease in taxes have the same effect as the increase in government spending? Why or why not?