Description
1. Describe the marginal propensity to consume and show how it is computed.
2. Discuss how spending and output influences equilibrium in a simple model where aggregate expenditure = consumption.
3. Describe how unplanned inventory can influence equilibrium in the model where AE=(C+I+G+(X-M))
4. Briefly describe the expenditure multiplier and state how it is computed. How is it different from the Tax multiplier?