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:

Temperature

A measure of the average kinetic energy of the particles in an object or system, indicating how hot or cold the object is.

Increased

Increased refers to a situation or condition becoming larger, greater, or higher in number or amount.

X-variable

An independent variable in mathematical functions and experiments that can be changed to observe its effect on the outcome.

Y-variable

The dependent variable in an equation or a model, whose value is predicted or explained by other variables.