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Please scroll down fully. Questions has 4 parts. Suppose the US economy is well described by a marginal propensity to consume (MP0) of 0.8 and

Please scroll down fully. Questions has 4 parts.

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Suppose the US economy is well described by a marginal propensity to consume (MP0) of 0.8 and a marginal product of labor of 20 and these unchanging, unchangeable quantities. But, a series of weird events will affect other variables in the economy. Because savings is endogenous, it will change in response. For each scenario, compute the change in savings, AS: 1. Hooray! The government has decided to spend 100 more (AG = 100) on breeding a unicorn! 2. Booo.... Congress changed their minds, instead they're changing taxes (AT = 100) by the unicorn amount, but not even going to try breeding one (AG = 0). 3. Taxes and unicorns are both unpopular, so abort the whole thing (AG = AT = 0). But then some international bank messed up in our favor and accidentally gave us money! National income rose by 100 (AY = 100)! 4. The bank gured it out and asked for the money back.... But! Something happened and some fancy extra limb was invented, essentially increasing the labor endowment by 10 (AL = 10)

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