As Discussed in the Case in Point on the Size

question 177

Multiple Choice

As discussed in the Case in Point on the size of the fiscal multiplier, a study conducted by John Taylor on the effect of fiscal policy since the year 2000 suggests that

• A) the multiplier effect of fiscal policy is much less than that for monetary policy.
• B) temporary fiscal policy financed through government borrowing implies a multiplier value between 0.8 and 1.5.
• C) fiscal policy has little effect on the economy and that the multiplier value is effectively zero.
• D) statistical models are inadequate to determine the multiplier and the multiplier value likely varies based on the state of the economy.

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Definitions:

Coherent

Logically connected or consistent; in physics, waves having a constant phase relationship.

Consistent

Marked by harmony, regularity, or steady continuity; free from variation or contradiction.

Disjunction

A logical operation yielding a truth value of true if at least one of the operands is true; often represented with the word "or" in logic.

Consistent

A property of a set of statements that allows them all to be true at the same time without contradiction.