You've just been appointed economic adviser to Examland. The mpe is .6; autonomous investment is $1,000; autonomous government spending is $8,000; autonomous consumption is $10,000; and autonomous net exports are $1,000.
a. What is the level of income in the country of Examland? Explain how you obtain your answer.
b. Autonomous net exports increase by $2,000. What will happen to income? Explain why.