1.In a closed economy with no government, a 1 billion increase in investment leads to a 5 billion increase in real GDP.What is the value of multiplier? Please interpret it after calculation.

2.Use the model of aggregate demand and short-run aggregate supply to explain how each of the following would affect real GDP and the price level in the short run.

a.a reduction in government purchases

b.an increase in nominal wages

c.a major improvement in technology

d.imposing in tariff barriers to imports

3.The United Kingdom (UK) held a national referendum (vote) on whether the UK should remain in the European Union (EU) or should exit the EU. Exiting the EU is likely to have several consequences: (1) increased barriers to trade between the UK and the remaining EU countries; (2) Reduced refugee flows.

Use the AS/AD model to describe the short run and long run effect of the UK exit from the EU.