Please see attached screenshots for questions to be solved.

Homework Assignment: Changes in Spending and the Multiplier Effect Your assignment is to study the diagram to the below depicting the economy of Maynardia and answer the questions given below (fill in the blank and/or circle the correct answer). Assume that the assumptions of the simple Keynesian model apply to the economy of Maynardia. Full Employment of Potential GDP 390 3800 C+1 3700 (Aggregate Expenditure Or AEl Line) Total Expenditures (Billions of Dollars) 3600 3500 3400 3300 45 DEGREES 3300 3400 3500 3600 3700 3800 3900 4000 Aggregate Output (Real GDP = DI, Billions of Dollars) I. Fill in the blank of circle the correct answer for each of the questions below: 1. Under these conditions, equilibrium occurs in Maynardia when real GDP is $. billion per year. At any higher level of output there is unplanned inventory (depletion/accumulation); if output is lower, there is unplanned inventory (depletion/accumulation). 2. At this time, a recessionary gap of $_ billion per year exists in the Maynardian economy. The gap shows on the graph as the (horizontal/vertical distance between . (Label the recessionary gap on the graph.) 3. For the economy of Maynardia to attain full employment, aggregate output must (increase/decrease) by $. billion per year.4. The aggregate expenditures line on the graph indicates that a $100 billion per year increase in real GDP will result in a $. billion per year (increase/decrease) in aggregate expenditures. That is, the slope of the AEl line is The marginal propensity to consume has a value of and the multiplier has a value of 5. a. To close the recessionary gap, planned aggregate expenditures must be $ (higher/lower) at each level of output. (Verify by drawing a new aggregate expenditures curve (AE2) on the graph that corresponds to your answer. If correct, the new equilibrium output must occur at the level of potential GDP.) b. Explain in words (in one short paragraph) the process by which the recessionary gap could be eliminated in the economy. That is, explain how an autonomous change in planned aggregate expenditures might result in a full employment level of production. Make specific reference to your graph and describe the multiplier process that occurs' following the autonomous change in spending