Suppose the government enacts a stimulus program composed of $600 billion of new government spending and $200 billion of tax cuts for an economy currently producing a GDP of $14,000 billion. If all of the new spending occurs in the current year and the government expenditure multiplier is 1.8, the expenditure portion of the stimulus package will add ....... percentage points of extra growth to the economy. (Round your response to two decimal places.) If the government taxation multiplier is 1.2, the tax cut portion of the stimulus package will add ........ percentage points of extra growth to the economy. (Round your response to two decimal places.) As a result of the stimulus program, the economy's GDP was increased by ....... percentage points over its value without the program. (Round your response to two decimal places.)
Suppose the government enacts a stimulus program composed of $600 billion of new government spending and $200 billion of tax cuts for an economy currently producing a GDP of $14,000 billion. If all of the new spending occurs in the current year and the government expenditure multiplier is 1.8, the expenditure portion of the stimulus package will add ....... percentage points of extra growth to the economy. (Round your response to two decimal places.) If the government taxation multiplier is 1.2, the tax cut portion of the stimulus package will add ........ percentage points of extra growth to the economy. (Round your response to two decimal places.) As a result of the stimulus program, the economy's GDP was increased by ....... percentage points over its value without the program. (Round your response to two decimal places.)
Chapter21: Fiscal Policy
Section: Chapter Questions
Problem 20SQ
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Suppose the government enacts a stimulus program composed of
$600 billion of new government spending and $200 billion of tax cuts for an economy currently producing a GDP of $14,000 billion.
If all of the new spending occurs in the current year and the government expenditure multiplier is 1.8, the expenditure portion of the stimulus package will add ....... percentage points of extra growth to the economy.
(Round your response to two decimal places.)
If the government taxation multiplier is 1.2, the tax cut portion of the stimulus package will add ........ percentage points of extra growth to the economy.
(Round your response to two decimal places.)
As a result of the stimulus program, the economy's GDP was increased by
....... percentage points over its value without the program.
(Round your response to two decimal places.)
If the economy's actual growth was −3 percent, then without the stimulus package, growth would have been ..... percentage points.
(Round your response to two decimal places and use a minus sign if
necessary.)
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