write the Answers
1) “Money multiplier is change in money supply over initial excess reserves equals 1 over required reserve rate. It shows how much the money supply will increase based on excess reserves. Banks will loan out whatever they don’t have to keep. The Spending multiplier equals 1 over 1 minus the marginal propensity to consume. It shows how much GDP will increase based on a change in income. People will spend a portion of their new income, which becomes more income for new people.”

2)Depends. As long as US is borrowing money to invest in future, is good idea. Education, health care, infrastructure spending will help future economic growth and make borrowing easier to pay off and make better tax base. Growing debt just to give tax breaks to rich or invade countries is not such a good idea and may leave future generations worth off and with more of spending and taxes going to servicing debt.”
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