Social Studies, 11.12.2019 09:31 wyattdawes45

Government spending multiplier
suppose that the marginal propensity to consume is 0.75. assume that there are no tax and no import leakages. government proposes a fiscal stimulus of expenditure spending of $600 billion.
(include calculations and formulas)

a) calculate the total change in real gdp in the economy.

b) how much is the induced change in the private sector aggregate spending?

c) explain the spending multiplier process by comparing an increase in unemployment insurance benefit to an increase in educational spending, which policy could achieve a faster effect of increasing the aggregate spending, and why?

d) what are some limitations of discretionary fiscal policy and the spending multiplier?

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Government spending multiplier
suppose that the marginal propensity to consume is 0.75. assum...

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