Section 2. Problem 1. Use graphs (for AD-AS and Money Market) to illustrate (with graphs) the following scenario. If the stock market crashes and the economy goes into a recession, what can a central bank do to offset such a downturn? (6 pts.) Problem 2 GDP ($m) Consumption Investment Government 100 90 50 20 200 170 50 20 300 250 50 20 400 330 50 20 500 410 50 20 You are given the above information about an economy. a) What is the MPC for this economy? (2 pts.) b) At what value of GDP does equilibrium exist? Show the equation. (1 pts.) c) Calculate the value of the multiplier. (1 pts.) d) If government spending increased by $40 million, what would be the new equilibrium GDP. Show the equation and calculation (2 pts.)