In Preparing Their Estimates of the Stimulus Package's Effect on GDP,Obama

question 21

Multiple Choice

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.

• A)during a recession;when the inflation rate is relatively low
• B)when the unemployment rate is high;when the value of the dollar is depreciating against foreign currencies
• C)when the federal budget is in surplus;when government transfer payments are declining
• D)during wartime;when short-term interest rates are near zero

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Definitions:

Gray Matter

A component of the central nervous system consisting primarily of neuronal cell bodies, dendrites, and unmyelinated axons, involved in muscle control and sensory perception.

Spinal Cord

A long, thin, tubular structure made of nervous tissue, which extends from the medulla oblongata in the brainstem to the lumbar region in the vertebral column, conducting neural signals between the brain and the body.

Myelin

A fatty substance that surrounds the axons of many neurons, facilitating rapid signal transmission.

Hypothalamus

A subcortical forebrain structure involved in regulating bodily functions. The hypothalamus also influences our basic motivated behaviors.