As Discussed in the Case in Point on the Size

question 115

Multiple Choice

As discussed in the Case in Point on the size of the fiscal multiplier, a study conducted by Jonathan Parker on the effect of fiscal policy during recessions 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:

SSE

Sum of Squares due to Error, a measure in statistics that quantifies the variance in an observed variable that is not explained by the predictive model.

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ANOVA Table

a table that summarizes the analysis of variance test results, used to determine if there are any statistically significant differences between the means of three or more independent groups.