Suppose there is a fall in real wealth and change the demand for autonomous consumption of goods and services by $10 billion. The marginal propensity to save (mps) in Australia is 0.25. Assume a simple economy.(2 marks)

a.How can a fall in real wealth affect consumption spending?(0.2 marks)

b.What is the size of the marginal propensity to consume (mpc)?(0.4 marks)

c.What is the size of the expenditure multiplier?(0.4 marks)

d.How much will be the change in the equilibrium GDP?(0.4 marks)

e.Can this event increase or decrease the equilibrium GDP?(0.2 marks)

f.If the mpc has decreased what will happen to the multiplier? Explain. (Do not need to calculate)(0.4 marks)