Q1. Suppose a consumer is at an optimum, consuming 6 hamburgers a week at a price of $1.50 each and 10 donuts a week at 50 cents a donut. If the price of a hamburger increases to $2.00, what will the consumer do to arrive at a new equilibrium? Why?
Q2. What do you understand by the investment multiplier? In what way does it defend the policy of public works on the part of the state during business depression?