1. In 2008 business investment in the U. S. increased by about $50 billion. Assuming the U. S mpe was 0.9, the increase in business investment caused U. S. GDP to increase by?
2. Suppose equilibrium income is $3000 billion and government policy makers determine that potential income is $3,500 billion. By how much must government spending change to close the GDP gap if mpe=0.80?
3. If the required ratio is .10 and individuals hold no cash, what is the maximum amount of money that can be created from a $2 mil deposit in the banking system?
4. If the government has no debt initially but then has annual revenues of $1.5 bil for 10 years and annual expenditures of $1.6 billion for 10 years, then the government has: deficit/surplus of how much?
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