Suppose the government enacts a stimulus program composed of $500 billion of new government spending and $300 billion of tax cuts for an economy currently producing a GDP of $15 billion. If all of the new spending occurs in the current year and the government expenditure multiplier is 1.6t he expenditure portion of the stimulus package will add nothing percentage points of extra growth to the economy. (Round your response to two decima

Suppose the government enacts a stimulus program composed of $500 billion of new government spending and $300 billion of tax cuts for an economy currently producing a GDP of $15 billion. If all of the new spending occurs in the current year and the government expenditure multiplier is 1.6t he expenditure portion of the stimulus package will add nothing percentage points of extra growth to the economy. (Round your response to two decima

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter18: Debates In Macroeconomics Over The Role And Effects Of Government

Section: Chapter Questions

Problem 3QP

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Suppose the government enacts a stimulus program composed of $400 billion of new government spending and $100 billion of tax cuts for an economy currently producing a GDP of $15,000 billion. If all of the new spending occurs in the current year and the government expenditure multiplier is 1.6, the expenditure portion of the stimulus package will add percentage points of extra growth to the economy. (Round your response to two decimal places.) If the government taxation multiplier is 1.2, the tax cut portion of the stimulus package will add percentage points of extra growth to the economy. (Round your response to two decimal places.) As a result of the stimulus program, the economy's GDP was increased by percentage points over its value without the program. (Round your response to two decimal places.) If the economy's actual growth was - 5 percent, then without the stimulus package, growth would have been percentage points. (Round your response to two decimal places and use a minus sign…
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