Four possibilities are equally likely and have payoffs of $2, $4, $6, and $8 . The expected value is:

Suppose real GDP is currently $12.5 trillion and potential real GDP is $13 trillion. If the president and Congress increased government purchases by $500 billion, what would be the result on the economy?

. What will be an ideal response?

Refer to Scenario 1-4. Had the firm not produced and sold the last 500 cigars, would its profit be higher or lower, and if so by how much?

A) Its profit would be $500 lower. B) Its profit would be $1,500 lower. C) Its profit would be $500 higher. D) Its profit would be $1,000 higher.