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a. Define the MPC and determine its value in this example: theMPC is the fraction of extra income households are expected tospend buying currently produced consumer product (i.e., expectedchange in Consumption Spending ichange in aggregate income) in thisb. Ddefine the_(M)PS and determine its value in this example: TheMPS is an abbreviation for the Marginal Propensity to Save which isdefine as the fraction of extra income households are expected tosave (i.e. not spend on currently produced consumer goods).and = c.Define equilibrium aggregate income and aggregate output (Y):equilibrium aggregate income and aggregate output is the dollarvalue of products business firms are expected to produce in thecurrent period given the Use the curves above to answer thefollowing: d. equilibrium Aggregate Expenditures = AggregateExpanditmaconer ear and, in this e. Define Investments (I) anddetermine its value: firms planned purchases of currently producedcapital goods and : f. Define Government Expenditures and determineits value: Government Expenditures is the dollar amount ofcurrently produced products the Government plans to purchase and inthis case = $2 trillio(n)/(y)ear (see curve labelled G) g. DefineNet Exports and determine its value: planned net foreign purchasesof currently produced products from firms in this economy a ? h.Now assume only Government Expenditures increases by $1 trillion()/() yr (see new G curve) (1) (Draw the new GovernmentExpenditures curve and the new Aggregate Expenditures curve) Bluecurve above original curve labelled G is the new GovernmentExpenditures curve and blue above original AE curve is the newAggregate Expenditure curve and use the new AE curve (blue AEcurve) to answer the following [This is done for you]

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