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

question 130

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 during wartime,the military expenditures multiplier would be ________ the administration's estimate of the government purchases multiplier,and economists Lawrence Christiano,Martin Eichenbaum,and Sergio Rebelo argued that when short-term interest rates are zero,the government purchases multiplier would be ________ the administration's estimate.

• A)higher than; lower than
• B)lower than; higher than
• C)higher than; equal to
• D)equal to; lower than

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Definitions:

Estimated Salvage Value

A rephrased definition: The anticipated remainder value of an asset after its period of use has concluded.

Useful Life

The period during which an asset is expected to be usable for the purpose it was acquired.

Double-declining-balance Method

A form of accelerated depreciation where an asset’s book value is decreased at double the rate of its straight-line depreciation.

Straight-line Method

A depreciation method that allocates an equal amount of depreciation expense for an asset over its useful life.