1. Miles and Jessica each make a yearly income of $40,000. Each of them was given a raise of $4,000. Miles' yearly spending increased from $40,000 to $42,500. Jessica's yearly savings increased from $3,000 to $4,000.

A. Miles lives in Country A. What is Miles' MPC?

B. Jessica lives in Country B. What is Jessica's MPS?

1. When businesses in the Macro Islands increased investment by $50 million to attract tourists, GDP increased by $200 million. Calculate the MPC in the Macro Islands?
2. Assume taxes increase by $200 and government spending increases by $200. The marginal propensity to consume is 0.75. Calculate the total change in GDP. (Remember you will need to use the tax multiplier for the tax change and the spending multiplier for the spending change).
3. If equilibrium output rises by a total of $500 billion in response to an increase in government spending of $100 billion, what is the marginal propensity to consume?