Problem
1. The Johnson family's income is $2000 per month. They typically spend $1800 on consumer goods and save the remaining $200. Mrs. Johnson just received a $200-per-month raise.
a. Assume that the J ohnsons' MPC is 80 percent. What effect does this raise have on their monthly spending and saving totals?
b. What was the Johnsons' APC before the raise? Did it change? Explain why or why not.
c. Mr. Johnson now loses his job-the family's income falls by $1000 per month. Explain how this event affects spending, saving, MPC, and APC.
2. What are the main issues in the debate between the Keynesians and the classical economists? What is your opinion? Do government policies create economic problems or correct them? Explain.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.