What will happen to the size of the expenditure multiplier and the size of the tax multiplier when the marginal propensity to save (MPS) increases?

If the spending multiplier is 2.5 and the economy is in a $600 billion contractionary gap, how much should I increase government purchases to eliminate the gap?

Why does a reduction in taxes have a smaller multiplier effect than an increase in government spending of an equal amount?

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Explain the concept of the spending multiplier.

If the multiplier in a closed economy with government is 2.5 and government spending increases by £350 million, by how much will income rise?

An increase in the marginal propensity to consume will make the spending multiplier ? An increase in taxes as a portion of income will make the spending mitltiplier

The graph below characterizes a simple economy with only two components of aggregate expenditures: consumption and investment. Consumption and aggregate expenditures per year (billions of dollars) $6,000 Multiplier 5,000 4,000 3,000 2,000 1,000 0 Find the value of the multiplier in this example 45° AE $1,000 2,000 3,000 4,000 5,000 6,000 Real GDP per year (billions of dollars)

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In preparing their estimates of the stimulus package's effect on GDP, Obama administration economists estimated a government purchases multiplier of 1.57. Economist Robert Barro argues that the government purchases multiplier would be lower than the administration's estimate, and economists Lawrence Christiano, Martin Eichenbaum, and Sergio Rebelo argued that the multiplier would be higher than the administration's estimate. when the unemployment rate is high; when the value of the dollar is depreciating against foreign currencies when the federal budget is in surplus; when government transfer payments are declining during wartime; when short-term interest rates are near zero during a recession; when the inflation rate is relatively low