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

---

Definitions:

Sales Tax Payable

A liability account that accumulates the collected sales tax from customers to be remitted to the respective tax authorities.

Asset Account

An asset account is a category in the financial statements that reports the value of a company's assets, such as cash, inventory, property, and equipment.

Liability Account

A type of accounting ledger entry that represents a company's legal debts or financial obligations that arise during business operations.

Invoice Value

The total amount shown on an invoice that a customer must pay, including the cost of goods or services, taxes, and any additional fees.