1. Would balancing the budget be a wise move during a recession? Carefully explain.
2. Assuming an open economy, if Government increases government spending by $10 million or decreases taxes by $10 million, given MPS = .2 and MPM = .2, which tool is more effective? Show your calculation.
3. Carefully explain what backs the money supply in Canada and how does the purchasing power of money relate to the price level?