Foundations of Economics - With MyEconLab
Foundations of Economics - With MyEconLab
8th Edition
ISBN: 9780134641720
Author: BADE
Publisher: PEARSON
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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
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