1. Decompose the following components of the Aggregate Expenditures identity: C + I + G. That is, breakdown the Consumption function: C = C₀+ bY_d; the Investment function I = I₀; and the Government expenditures function: G = G₀. (Don't be stingy with the details!And don't use graphs.)

1. Assume Zillville is in recession. Congress decides to pass a bill in hopes of increasing real GDP by $300 billion. With an mpc=0.8:

a. (2 points) By what amount would the necessary change in government expenditures need to be to accomplish this goal?

b. (2 points) By what amount would the necessary change in (net) taxes need to be for this?

c. (1 point) This question involves the type of fiscal policy known as discretionary. Which kind did you "use", expansionary or contractionary?