Q1:Suppose that the MPC in North Laurasia is .5.

a. What is the spending multiplier for the North Laurasian economy?

Instructions:Round your answer to one decimal place.

b. If the government spends an extra $1000, by how much with the economy grow?

Instructions:Enter your answer with a whole number.

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Q2: a. Suppose that, if their income rises by $100, all households in Normalia raise their spending by $60.

Instructions:Round your answers to one decimal place.

The MPC in Normalia is:

MPS in Normalia is:

b. Suppose that the MPC in South Pangea is 0.8.

Instructions:

Enter your answer as a whole number.

If a South Pangean household earns an extra $100, by how much will they increase their spending?