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Multiplier Problems -- Show all of your work.
1.) If the desired level of GDP is $750 billion above the equilibrium level, and the
MPS is .20, what change in government spending would be necessary to achieve
the desired level of GDP?
2.) If the equilibrium level of GDP is $2 trillion, the desired level of GDP is $2.750
trillion, and the MPC is .80, what tax policy would be required to achieve the
desired level of GDP?
3.) If the MPS is .25, a $300,000 increase in government spending combined with a
$200,000 decrease in taxes would result in what change in equilibrium GDP?