1.

If we identify a recessionary gap of $150 Billion and estimate the multiplier to be 1.7, by how much do we overshoot our required stimulus if we increase government spending by $100 Billion?

A.$20 Billion

B.$50 Billion

C.$85 Billion

D.None of the above

and explanation please

2.

The issue of crowding-out is likely to be more significant when

A.the economy is at or close to full-employment

B.there is a large recessionary gap

C.there are significant under-utlised resources in the economy

D.none of the above

and explanation please