1) For this problem please assume the MPC is 0.7 and that the formula for the fiscal multiplier is as follows: 1 divided by (1-MPC)The government decides to stimulate the economy using fiscal policy.By how much will AD at current prices shift/increase initially (before multiplier effects) witha) a $232 billion increase in government purchaseb) a $232 billion tax cutWhat will the cumulative or total AD shift/increase be (after the multiplier effect) forc) The increased government spending of 232 billion in part (a) of this questiond) The tax cut of 232 billion in part (b) of this questione) Assume the economy has a recessionary GDP gap of 770 billion and an upward sloping AS curve. Will the cumulative (total) impact of the increase in government spending in (c) be enough to close the GDP gap? Explain.f) Use a clearly labled graph to help you explain your answer to (e)