As discussed in the Case in Point on the size of the fiscal multiplier, a study conducted by John Taylor on the effect of fiscal policy since the year 2000 suggests that
A) the multiplier effect of fiscal policy is much less than that for monetary policy.
B) temporary fiscal policy financed through government borrowing implies a multiplier value between 0.8 and 1.5.
C) fiscal policy has little effect on the economy and that the multiplier value is effectively zero.
D) statistical models are inadequate to determine the multiplier and the multiplier value likely varies based on the state of the economy.
Ans: C) fiscal policy has little effect on the economy and that the multiplier value is effectively zero.
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What will be an ideal response?