Suppose that marginal propensity to consume is equal to 0.8 .The government has the balanced budget right now. They decide to increase government spending by $100 billion. This increase in spending is partially financed by a $50 billion increase in taxes.

Answer following questions:

a) As a result of this, what happen to GDP?(How much it will go up/down)

b) As a result of this, what happen to government budget (still we have the balanced one, or it creates deficit or surplus. If it creates any unbalanced budget name it and find the amount)(How much it will go up/down)