Beyond th ate submission is accepted with 50% off the max grade. Good Luck. Question 1 10 Points Suppose that marginal propensity to consume is equal to 0.8 .The government has the balanced budget right now. They decide to increase government spending by $100 billion. This increase in spending is partially financed by a $50 billion increase in taxes. Answer following questions: a) As a result of this, what happen to GDP? (How much it will go up/down) b) As a result of this, what happen to government budget (still we have the balanced one, or it creates deficit or surplus. If it creates any unbalanced budget name it and find the amount) (How much it will go up/down) Use the editor to format your answer Question 2 10 Points Explain the following graph. ( use the relation between budget deficit and business cycle) explain in details. M Extra.png Budget deficit (percent of GDP) 12% 10 8 A ON -2 -4 1964 1970 1975 1980 1985 1990 1995 2000 2005 2010 2013 Year