Q. An economy has a break-even point of $3,000. For every additional dollar earned by households, they spend 80 cents. Government purchases $596 in goods and services and also spends $742 in transfer payments. Businesses invest $53 in plant, equipment and inventory. Foreign buyers purchase $60 and buyers from United States purchase $56 from foreign countries. (All spending and income figures are in billions.)

1. Illustrate what is marginal propensity to consume in this economy?

2. Illustrate what is multiplier in this economy?

3. Illustrate what is equilibrium level of GDP in this economy?

4. Illustrate what is equilibrium level of Aggregate Expenditures in this economy?

5. At equilibrium, illustrate what is level of Consumption in this economy?

6. By how much will equilibrium change if foreigners increase their expenditures by $4?