1) The government has just invested $300 million in infrastructure. Using the multiplier effect calculate the real value of the spending to the economy with 40% leakages. Show ALL calculations. EXPLAIN leakages that reduce this amount.

2) Explain the difference between a gov't deficit and gov't debt.

3)In the table below are the Canadian federal budget surplus/deficit for each year as indicated (numbers are rounded). The total federal debt at the end of 2014 was approximately $626,000,000,000. i) Calculate the debt at the end of each year and enter it in the corresponding debt cell (minus all the zeros) then calculate for ii and iii.

Year 2014 2015 2016 2017 2018

+Surplus/- deficit ----- - 2.9 bil - 5.5 bil - 17.1 bil - 19.7 bil

Federal Gov't Debt $626 bil

If the labour force at the end of 2018 was 19,933,500, ii) how much does each person in the labour force owe of the federal debt? And iii) how much debt did the federal government add per person in the labour force in 2018 alone?

ii) $ __________________iii) $ __________________

4) Scenarios below describe economic events. Draw the appropriate LAS/SAS/AD curve(s) and i) explain what may be the impact on the economy, ii) which fiscal and monetary policy (could be more than one) may be used to correct the situation, iii) and the resulting economic impact of policy implementation (theoretically anyway ). Fully label graphs and show any before and after shifts of the curve(s). Bullet point answers for the explanation portion are ok.

a-Trouble in paradise... the economy has slipped into a recession.

b- Life has been good recently and most Canadians are generally positive and upbeat in their work and economic expectations. Most are expecting a generous increase in wages over the next few years.

5)Using a calculation example, explain how chartered bank actions add to the money supply.