household income is either saved or spent on consumption goods produced in the same economy. a. Calculate the GDP: C = $2000+ 0.7YD T = $50 I = $400 G = $500 b. Suppose the mpc is 0.7. Assuming no trade or taxes in this simple case, calculate the multiplier. c. Imagine there is a fall in "consumer confidence" - maybe people believe some world event is going to cause the economy to contract so they spend less. This means a fall in autonomous consumption spending of -50. Using the multiplier you just found in (a), calculate roughly how this fall in consumer confidence will ripple out into the macroeconomy. d. Imagine there is a rise in "investor confidence" - investors believe the economy is ripe for expansion. This means a rise in autonomous investment of 100. Using the same multiplier, calculate roughly how this translates into a rise in aggregate income. e. Suppose that GDP is currently $20 trillion dollars and the government believes it can grow to $22 trillion dollars. Given the same multiplier you calculated in (a), how much would the government have to increase its spending to raise GDP to this amount? (Hint: it does not have to increase its spending by the difference in these two GDPs!)