1. Suppose that the initial GDP is $1,000 and we want to expand it to $1,600. Average MPC for country is 2/3. Discuss what should be new level of government spending if initial level is $100. Also discuss how much of a tax policy change reach to same results?
2. Calculate the leakages and how do they affect the economy? Discuss how can actual investment be greater than desired investment and what type of gap is economy experiencing when this occurs?
3. Suppose you have $2,000 autonomous consumption and given the $10,000 disposable income did not allow you to save anything. Explain what will be your MPC?