^{Question 3: (typed answer please )}

1.At a level of National Income of AED 30,000 Million, the government announced an increase in expenditures from AED 1000 Million to AED 1500 Million as a stimulus package for infrastructure development and at the same time government also announced an increase in tax from AED 1000 Million to AED 1600 Million. The marginal propensity to consume (MPC) for the country is 0.75.

a.Find the impact of these changes on National Income.

b.Explain the leakages of multiplier