Using the following formula, how much would the Fed have had to reduce long-term interest rates to get the same stimulus as President Trump’s $200 billion increase in government spending?   Bernanke’s policy guide: 1/4 point reduction in long-term interest rate = $50 billion fiscal stimulus

Economics: Private and Public Choice (MindTap Course List)
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Chapter15: Macroeconomic Policy, Economic Stability, And The Federal Debt
Section: Chapter Questions
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Using the following formula, how much would the Fed have had to reduce long-term interest rates to get the same stimulus as President Trump’s $200 billion increase in government spending?

 

Bernanke’s policy guide: 1/4 point reduction in long-term interest rate = $50 billion fiscal stimulus

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