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