Complete the following. Post your answers to the dropbox or upload them as an MS Word or PDF file. This assignment is worth 10 points. If you want more feedback, show your work and your reasoning.
1. What is the relationship between the MPC and the Multiplier? (explain or state the equations)
2. What is the Multiplier Effect? Define and explain this effect.
3. Explain what happens to aggregate demand in these situations:
a) pessimistic firms decease investment spending.
b) government spending increases to try to stimulate the economy
c. there is a decrease in the price level.