Economics: Principles & Policy
14th Edition
ISBN: 9781337912679
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning US
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Question
Chapter 27, Problem 2DQ
To determine
The differences in the multiplier effects on government spending and investment.
Expert Solution & Answer
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Why would a higher tax rate lower the government purchases multiplier? What does the tax rate have to do with the government purchases multiplier?
Suppose government purchases increase by 10
billion dollars, and as a result, real GDP increases
by 15 billion dollars. Calculate the multiplier.
Explain why the multiplier is generally greater
than 1.
Explain the concept of the spending multiplier.
Chapter 27 Solutions
Economics: Principles & Policy
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- Give an example of any factor that influence the size of the multiplierarrow_forwardGive an example of any factor that influences the size of the multiplier?arrow_forwardThere might be many factors (economic and non-economic) that affect the size of the multiplier. What are some that you think could influence its size? Which ones do you think would make it larger, and which are more likely to make it smaller?arrow_forward
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