Macroeconomics 1. Illustrate graphically what occurs to AD (Aggregate Demand) when there is an increase in government spending. B. Which Policy is this? 2. What is the spending multiplier when MPS= 0.56 and MPI=0.28? B. What is the level of Real GDP if government spending increases by 400 million? 3. Graph and Label the three stages of the AS curve. Explain the main characteristics of each stage. 4. What determinants cause the AD curve to shift 5. Consumer Saves 15% of additional income, spends 65% of income on goods and services and spends 20% on Imports. What is the tax multiplier? 6. The spending multiplier is 2 How much is the GDP gap? Y Aggregate Production Potential Income FE AE AE Aggregate Expenditures ( $ billion) E, Recessionary Gap 45 X 150 250 Fig. 31. 4 National Income ( $ . billion) O 190 W