Explain how the aggregate expenditure function shifts in response to changes in .each of the following variables . the real interest rate increases ....

1. Explain how the aggregate expenditure function shifts in response to changes in each of the following variables: a. the real interest rate increases.b. Consumer confidence increases.c. Higher taxes are imposed on business profits.d. The economics of many countries in the rest of the world go into recessions2. Given the following variable in the open economy aggregate expenditure model, autonomous consumption (C0) = 200, autonomous investment (I0) =200, government spending (G0) = 100, export spending (X0) = 100, autonomous import spending (M0) = 100, taxes (Tp) = 0, marginal propensity to consume (c1) = 0.8, marginal propensity to invest (i1) = 0.1, and marginal propensity to import (m1) = 0.15,a. Calculate the equilibrium level of income for the open economy aggregate expenditure model.b. If there is an increase in autonomous import expenditure from 100 to 200 resulting from an increase in the currency exchange rate, calculate the new equilibrium level of income and the value of the multiplier.c. Compared with the original equilibrium in part a, if the government decides to impose taxes (T) of 100, calculate the new equilibrium level of income.d. Hint. Remember that consumption has an autonomous component and is a function of disposable income, Yd, where Yd = Y-Tp3. Explain which of the following are counted as part of the money supply (M1): a. Checking account deposits. b. Stocks c. Savings account deposits d. Government bonds4. If the reserve requirement (rr) is 0.2, what is the simple deposit multiplier? if, in addition, the currency deposit ratio(c) is 0.05 and the excess reserve ratio(e) is 0.15, what is the money multiplier? Explain why the money multiplier differs from the simple deposit multiplier.