A fiscal stimulus was initiated by President Obama in response to the economic downturn of 2008-2009 . At that time, the president's economists estimated the multiplier to be
a. 3.2 for government purchases and 2.0 for tax cuts.
b. 2.4 for government purchases and 1.4 for tax cuts.
c. 1.6 for government purchases and 1.0 for tax cuts.
d. 1.6 for government purchases and 0.4 for tax cuts.
c
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Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is $2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day. What is Vipsana's total cost per day when she does not
produce any gyros and does not hire any workers? A) $0 B) $2 C) $60 D) $120
Using Figure 2 below, suppose that the economy started at PAE2. A potential change that could cause the economy to go from PAE2 to PAE1 might be:
A. consumption increases.
B. investment increases.
C. export increase.
D. government spending decreases.