Foundations of Economics - With MyEconLab
8th Edition
ISBN: 9780134641720
Author: BADE
Publisher: PEARSON
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Question
Chapter 30, Problem 1IAPA
To determine
To find:
The amount of fiscal stimulus required to close the output gap if the multiplier was as large as believed by the Person O's team and the amount of fiscal stimulus required to close the output gap if the multiplier was as large as believed by the Person M's team.
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Suppose there are both multiplier and crowding out effects but without any accelerator effects. An increase in government expenditures would
a. always shift aggregate demand right by a smaller amount than the increase in government expenditures.
b. always shift aggregate demand right by a larger amount than the increase in government expenditures.
c. shift aggregate demand right by a larger, equal, or smaller amount than the increase in government expenditures.
d. always shift aggregate demand right by the same amount as the increase in government expenditures.
If the propensity to consume decreases from 95% to 80%, then Fiscal stimulus multiplier does what? Please use the multiplier effect.
Why might politicians prefer government spending increases instead of tax cuts to increase aggregate demand?
tax multipliers are larger than government spending multipliers
government spending multipliers are larger than tax multipliers
politicians can direct government spending to their supporters
politicians can direct tax cuts to their supporters
government spending multipliers are larger than tax multipliers and politicians can direct government spending to their supporters
Chapter 30 Solutions
Foundations of Economics - With MyEconLab
Ch. 30 - Prob. 1SPPACh. 30 - Prob. 2SPPACh. 30 - Prob. 3SPPACh. 30 - Prob. 4SPPACh. 30 - Prob. 5SPPACh. 30 - Prob. 6SPPACh. 30 - Prob. 7SPPACh. 30 - Prob. 8SPPACh. 30 - Prob. 9SPPACh. 30 - Prob. 1IAPA
Ch. 30 - Prob. 2IAPACh. 30 - Prob. 3IAPACh. 30 - Prob. 4IAPACh. 30 - Prob. 5IAPACh. 30 - Prob. 6IAPACh. 30 - Prob. 7IAPACh. 30 - Prob. 8IAPACh. 30 - Prob. 9IAPACh. 30 - Prob. 10IAPACh. 30 - Prob. 1MCQCh. 30 - Prob. 2MCQCh. 30 - Prob. 3MCQCh. 30 - Prob. 4MCQCh. 30 - Prob. 5MCQCh. 30 - Prob. 6MCQCh. 30 - Prob. 7MCQCh. 30 - Prob. 8MCQ
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- Which of the following is true about government spending (G) and tax (T) multiplier? The G multiplier is bigger in absolute value than the T multiplier. The T multiplier is bigger in absolute value than the T multiplier. G and T multipliers are always the same size. Whether the G multiplier is larger/smaller than the T multiplier depends on the size of MPC.arrow_forwardwhat will happen to the aggregate demand If government purchases increase by $100 billion, and the crowd-out effect is larger than the multiplier effectarrow_forwardSuppose 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.…arrow_forward
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