Scenario 2: Suppose MPS=0.52 and MPI=0.28

6.What is the spending multiplier?

7.What is the level of real GDP if the government increases spending by 500 million dollars?

8.What is the level of real GDP if the government decreases spending by 200 million dollars?

9.List the determinants that causes Aggregate Demand curve to shift.

10.Name the three basic tax systems used in the United States.

11.Illustrate graphically what occurs to AD (Aggregate Demand) when there is a decrease in government spending.

12.Consumer Saves 25% of additional income, spends 35% of income on goods and services and 25% on Imports. What is the tax multiplier?