Given:

Gov. spending = 350 Investment = 170

Autonomous spending = 730 MPC = .85

Full Employment Income = 5,000 Tax Rate = 20%

Imports = 200 + .05(Y_d) Exports = 700

Find:

__ ___ 1. Simple Keynesian Multiplier (from the formula)

___ __ 2. Actual multiplier from working the problem

___ __ 3. Y_e

__ __ 4. Find the Trade Balance. (Be sure to show the sign.)

__ __ 5. Is government operating in deficit or surplus?

(Give amount with proper sign)

__ ___ 6. Find the change in government spending necessary to insure

that Y_e = Y_f.