Topic: Fiscal Policy 1. A government collects $0.35 on every new dollar of income. Of the remaining $0.65 of disposable income, 20% is spent on imports, and 10% of the disposable income is saved. a....

Topic: Fiscal Policy

1. A government collects $0.35 on every new dollar of income. Of the remaining $0.65 of disposable income, 20% is spent on imports, and 10% of the disposable income is saved.

a. What is the marginal propensity to withdraw?
b. How much of each new dollar of income is spent on domestic consumption?
c. What is the spending multiplier in this economy?