Discuss how successful the American Recovery and Reinvestment Act was at increasing real GDP and employment

What will be an ideal response?

The American Recovery and Reinvestment Act tried to increase real GDP and employment by both increasing government purchases and cutting taxes. Economists have not yet come to a consensus on how effective the act was. If the expenditure multiplier is as large as the Obama administration and the Congressional Budget Office believe, then the act substantially increased both real GDP and employment. However, if the expenditure multiplier is smaller, as other studies indicate, then the act increased real GDP and employment by a relatively modest amount.