.0/msohtmlclip1/01/clip_image002.png”>

Based on the graph
above,

35. government spending at an output level of $0 = $__80_____

36. government spending at an
output level of $1,200 = $______

37. Prior to any spending by
government, the economy was achieving equilibrium at an output level of $__800____

38. When government spending
was added to private sector spending, aggregate expenditures increased by $__80____

As a consequence of this added
spending by government, aggregate output

39. increased by $__400____

40. to a total of $___1200_____.

41. In this case, the simple
spending multiplier is _______.

42. If this economy was producing exactly $1,200 worth of real GDP and
then government cut its spending in half, the economy would

a) start to expand b) start
to contract c) not be affected