I. Read the problems carefully, and attach your solutions. Box your final answers.

1a) Assume that Ye1 = 2500, given MPC = 0.60, (a) find the marginal propensity to save (M PS). Your answer 1b) Given the MPC = 0.60 in (1a), find the spending multiplier. Your answer 1c) Given the spending multiplier in (1b), find the change in the change in the equilibrium level of income due to the change in investment equal to 700? Your answer 1d) Given the old income of Ye1 = 2500, and the change in income in (1c), what is Ye2? Your answer 4 points 4 points 4 points 4 points 2a) Given the same MPC = 0.60 in 4 points Problem 1, find the change in equilibrium level of income when the government spending increases by 2000 Your answer 2b) If we start from Ye2 in Problem 4 points 1 and given the change in equilibrium income due to change in government spending, what is the new equilibrium level of income (Ye3). Your answer 3a) Given the same MPC =0.60 in 4 points Problem 1, find the change in equilibrium level of income when exports increased by 400 but the imports increased by 100, Your answer 3b) If we start from Ye3 in Problem 4 points 2, and given the change in equilibrium income due to change in net exports in (3a), what is the new equilibrium level of income (Ye4)? Your answer 4a) Given the same MPC= 0.60 in Problem (1a) find the change in equilibrium level of income when the lumpsum tax increased by 2000. Your answer 4b) If we consider the simultaneous increase in government spending and lump sum taxation by 2000 each, as given in the previous problems, how much is the change in the equilibrium income attributed to the balanced increase in G and T? Your answer 4 points 4 points In science, which of the following 2 points statements best differentiates hypotheses from theories? * Hypotheses usually are relatively narrow in scope; theories have broad explanatory power O Theories are hypotheses that have been proved. O Hypotheses are guesses; theories are correct answers. O Theories are proved true in all cases; hypotheses are usually falsified by tests. !The application of scientific 2 points principles and idea for a specific purpose is known as * 0 technology. 0 inductive science. 0 pure science. 0 deductive science. The Scientific Revolution is a new 2 points philosophy of knowledge based on the idea that : * emphasizes individual rather than religious values and the use of reason rather than faith. humans were superior to nature in all ways. monarchs have supreme power and are answerable to GOD alone. the derivation of new experimental methods and reason 000 O The Scientific Revolution and the 2 points Enlightenment were lot in common is that they. * 0 Traditional values were highly valued. O policies of the enlightened despots O rejection of the theory of natural rights 0 emphasized the value of human reasoning Empiricism theory emphasizes 2 points evidence, in the formation of ideas through systematic experimentation on the idea that * 0 Information source from corporeal expenence. by correcting and integrating previous knowledge. claims for each View about nature. causation is a rational connection between events and their occurrence. OOO Which of the following objectives 2 points does the formulation of a model for a system or a process serve? * 0 question and observation 0 as a testable hypothesis. 0 It records observations. 0 It serves as a data point among results. Gathering data based on 4 points observation is an example of ; exploring this data to reach a generalization is an example of reasoning. * O hypothesis-based science; inductive O the process of science; deductive O discovery science; inductive O descriptive science; deductive