1.Given MPC (marginal propensity to consume) = 0.75, if the government implements an expansionary fiscal policy as

(a)cutting taxes by $10 billion, then by how much would total spending increase over an infinite period?

(b)spending $10 billion, then by how much would total spending increase over an infinite period?

2.Suppose the Federal Reserve decided to purchase $10 billion worth of government securities in the open market. How will the lending capacity of the banking system be affected if the reserve requirement is 10 percent?

3.Assume an economy's annual money velocity in circulation is 10. Please answer the following two questions:

a.If the annual nominal GDP is $20 trillion, how much money supply are enough for money demand?

b.In the view of monetarists (i.e. neoclassical view), if the annual economic growth rate is 5%, what should be the money supply increasing rate to maintain a low inflation rate as 2%?