1. Suppose that an economy is in the middle of a recession and government policy makers want to increase aggregate demand by $750 billion. If the economy's Marginal propensity to consume is 0.7 and there is no crowding out, the government should do which fiscal policy action? B. Find the Spending multiplier.

2. If the reserve requirement is 5% for banks with more than $16.3 million-$124.2 million in deposits. How much needs to be kept on reserve for a bank with $60 million in deposits?

3. Describe and GRAPH the three phases of the AS curve.

4. Explain 2 main points of Fiscal policy.

5. Illustrate graphically what occurs to AD when there is a decrease in government spending.

6. The marginal propensity to consume in the nation of Erd is 0.85.

A. What is the value of government spending multiplier?

B. What is the value of the tax multiplier?

7. An economy is currently producing real GDP that is $500 billion less than its full employment output is experiencing an undesirable amount of inflation its MPC is 0.8. Assuming that this is a closed economy with no crowding out, which of the following best describes the impact that a $120 billion increase in government spending will have on this economy?

8. What are the roles of the FEDs trading desk?