The mpe is .6; autonomous investment is $1,000; autonomous government spending is $8,000; autonomous consumption is $10,000; and autonomous net exports are $1,000. a. What is the equilibrium level of income in the country? b. Autonomous net exports increase by $2,000. What will happen to income? c. What will happen to unemployment? (Remember Okun s rule of thumb.) d. You ve just learned the mpe changed from .6 to .5. How will this information change your answers in a, b, andc?
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