Evaluate the Expenditure Multiplier effect coming from an increase of government consumption in $400, combined with a reduction of taxes in the amount of $200 (assume a mpc=0.8) show formula and calculations for full credit.

Question
Evaluate the Expenditure Multiplier effect coming from an increase of government consumption in $400, combined with a reduction of taxes in the amount of $200 (assume a mpc=0.8)

show formula and calculations for full credit.

Identify and explain 2 potential complications related to the use of fiscal expansion as a way to promote economic activity