During 2010 and the first half of 2011, it was estimated that 94 percent of business spending had gone to replacing worn-out or outdated equipment. That left only 6 percent of spending for expanding operations (Cooper, 2011).

1. What effect will this type of spending have on a firms balance sheet? What about its income statement?

2. With only 6 percent of spending allocated for expansion by businesses, how did this affect the job market in the United States?