1. Assume that you have won $2 million in the California lottery. Explain exactly what you would do with this windfall within the next year.
2. Using your response to the above example:

A) What would be your MPC (marginal propensity to consume) and your MPS (marginal propensity to save)? Refer to lecture notes explaining each.

B) Instead of an extra $2 million assume you get an extra $2,000. What would be your MPC and MPS in this case?

C) Explain why there was or was not a change from 'a' to 'b' above.