1. Assume that the current equilibrium output is $400. Full employment equilibrium output is $880. (using the scenario below)
   1. If Congress wants to return the economy to full employment level output, in what way should the government change taxes?(i.e., increase or decrease)
   2. By how much would the government have to change taxes to get the economy to full employment equilibrium?

Scenario: Your income increases from $1,200 to $2,200, and your consumption increases from $1,100 to $1,850.

1. Calculate the MPC.
2. Calculate the MPS.
3. Using the MPS & MPC from #1 & 2, calculate the:
   1. Government spending multiplier
   2. Tax multiplier