1. Why do less liquid asset tend to have higher rate of return?
2.a) If the U.S. used commodity money (Gold, for example), what happens to the price level if the economy grows but the money supply does not?
b) What happens to the price level if the money supply increase but the economy does not grow?
3. What is the problem with increasing government spending if the multiplier is less than 1? (Hint: consider how much the government had to borrow vs. how much it increased real GDP.)