Question 1 & 2

Question 1 a. Calculate AE given the information below and completely fill in the table. b. Where is equilibrium in this economy based on the table? State the level, don't just point to it or highlight it. c. Using the injections-withdrawals approach, demonstrate that the point you chose in part 2 is the equilibrium. At this point withdrawals = injections. Taxes: $10 at each level of income Investments: $15 Government Spending: $25 Total Taxes Disposable C Income S G AE Income (AO) 100 125 105 135 120 145 140 150 150 155 170 160 180 170 190 180 200 135 240 200 280 215 310 230 Injections-Withdrawals Approach Item (Name the item Injections (place the $ Withdrawals(place the $ here ) amount in this column) amount in this column) Totals Question 2 a. What is the multiplier if households have an MPC of 0.6?b. Assume that the households have an MPC of 0.80 and there is a $9 billion increase to investment spending. For full marks this information must be presented in a table your answers calculated to 2 decimal places and all rows completed. Change in Change in Change in income consumption savings Round 1 Round 2 Round 3 Round 4 Round 5 All others Total Question 3 Name and explain two factors that change aggregate demand, providing an example of each