Answer the following questions.

5. Define Expansionary Fiscal policy and Contractionary Fiscal Policy.

6. Define Budget surplus and budget deficit.

7. Define the Government spending multiplier and tax multiplier and write both the multiplier equations.

8. Assume that the consumption function for the above economy is C = 1000 + .75Yd fill in the empty cells. (All Figures are in Billions of Dollars)

Output Taxes Disposable Consumption Saving Investment Government Aggregate Income Spending Expenditure 5000 1000 750 750 7000 1000 750 750 9000 1000 750 750