Consider a hvpothecal closed economy:r in which households spend $0.?0 of each addional dollar they earn and save the remaining $0.30. The marginal propensity to consume (MPC) for this economyr is V , and the spending multiplier for this economyr is V . Suppose the government in this economy decides to decrease government purchases by $300 billion. The decrease in government purchases will lead to a decrease in income. generaljng an initial change in consumption equal to V . This decreases income vet againr causing a second change in consumption equal to V . The total change in demand resulting from the initial change in government spending is v The following graph shows the aggregate demand curve (ADI) for this economy before the change in government spending. Use the green line (triangle symbol) to plot the new aggregate demand curve (19.02) alter the multiplier eiec't takes place. For simplicity, assume that there is no "crowding out." Hint: Be sure that the new aggregate demand curve (A32) is parallel to the initial aggregate demand curve (11131). You can see the slope of A31 by selecu'ng it on the graph. ('2) no 135 Al] 130 125 1Z3 PRICE LE'u'EL 115 110 105 1|]O I] 'l 2 3 4 5 B T B OUTPUT (TrililJl'Is of dollars}