5. White House officials often exude more confidence than they actually

feel about future prospects for the economy. Why might this be a good

strategy? Are there any dangers inherent in it?

6. Suppose everyone expects investment to rise sharply in three months.

How would this expectation be likely to affect bond prices?

7. Suppose that every increase of $1 in real GDP automatically stimulates

$0.20 in additional investment spending. How would this affect the

multiplier?