In our simple models, the multipliers are the same for all spending and the same for...

In our simple models, the multipliers are the same for all spending and the same for all taxes. How do real world multipliers differ? How did they impact fiscal policy in the Obama American Recovery and Reinvestment Act of 2008? What does that tell us about fiscal policy in 2020?

Expert Solution

In the real world there exist the fiscal multiplier. every member of the society do not have equal marginal propensity to consume. Households with low income have a tendency of spending greater share of their windfall compared to those with higher income. Fiscal stimulus influences the MPC. Various policies dramatically multiple different fiscal multipliers. when the country was undergoing The great depression President Obama signed the American recovery and reinvestment act. The main purpose was to provide cyclical fiscal support to the country. That I am the building of strong and further more resilient economy for the future. Half of the SAT included job measures and tax cuts. Other half purpose for investment in the critical areas. The recovery act included unprecedented accountability and transparency. More than about 80 billion dollars where spend on infrastructural projects. About 87 billion dollars on healthcare expansion. 4.5 billion dollars for modernising the grids of electric power. the primary focus of this act was saving the existing jobs and also new job creation as soon as possible.

Rahul Sunny answered 1 year ago

In our simple models, the multipliers are the same for all spending and all taxes. How do real world multipliers differ? How do they impact fiscal policy?

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