Please answer b (I and ii) and c (I and ii)

The banking regulator requires banks to maintain a minimum liquidity ratio of 7.5%. The government spends $7 billion from its reserves held in the central bank on domestic infrastructure projects. a) Discuss the benefits of government spending on infrastructure projects. [4 marks] b) i) Explain the maximum increase in total deposit that could be generated by this new spending. ii) Explain why the actual rise in deposits may be less than the number calculated in part (i). [4 marks] c) The marginal propensity to consumer domestically produced goods and services out of national income is 0.7. i) Determine the increase in equilibrium national income that should result from the actions described in this question. ii) Briefly discuss reasons why national income might not rise by the amount predicted in part (i). [6 marks] [Total: 14 marks] The banking regulator requires banks to maintain a minimum liquidity ratio of 7.5%. The government spends $7 billion from its reserves held in the central bank on domestic infrastructure projects. a) Discuss the benefits of government spending on infrastructure projects. [4 marks] b) i) Explain the maximum increase in total deposit that could be generated by this new spending. ii) Explain why the actual rise in deposits may be less than the number calculated in part (i). [4 marks] c) The marginal propensity to consumer domestically produced goods and services out of national income is 0.7. i) Determine the increase in equilibrium national income that should result from the actions described in this question. ii) Briefly discuss reasons why national income might not rise by the amount predicted in part (i). [6 marks] [Total: 14 marks]