1: For simplicity, let's assume that every household has a marginal propensity to consume (MPC) of 0.75. If the government implements a fiscal policy involving its purchases of goods and services, by how much should government purchases (G) change to increase the GDP by $4trillion?
2: For simplicity, let's assume that every household has a marginal propensity to consume (MPC) of 0.75. If the government implements a fiscal policy involving government transfers (TR), by how much should government transfers change to increase the GDP by $4trillion?
3: For simplicity, let's assume that every household has a marginal propensity to consume (MPC) of 0.75. What can you conclude about the effect of fiscal policy involving government purchases and fiscal policy involving government transfers on aggregate demand?