Q2 (15 points) Milwaukee Bucks built a new arena. We want to analyze how much the new arena is going to impact the city's economy. Suppose that Milwaukee residents save 30% of their additional income. Q2.1 (5 points) What is the marginal propensity to consume in Milwaukee? Explain. Q2.2 (5 points) What is the multiplier in Milwaukee when there is no trade with other cities and countries? Explain. Q2.3 (5 points) Now suppose the marginal propensity to import is 0.3. What is the multiplier? Explain. Q3 Suppose New York wants to build a new facility to replace Madison Square Garden. Assume that the cost of building a new arena in midtown Manhattan is $2,000 and that all costs occur right away. Also assume that New York will receive annual benefits of $400 for the next 6 years, after which the new arena becomes worthless. Q3.1 (5 points) What is the present value of the new arena if interest rates are 5%? Explain. Q3.2 (5 points) Does it make financial sense to build the new facility if interest rates are 5%? Explain