Question

According to computer estimates using a traditional macroeconomic model, the Obama administration found that the multiplier for tax cuts and government expenditures were respectively

a. .99 and 1.59.
b. 1.59 and .99
c. 1.3 and 1.7

Answer 1

The Obama administration found that the multiplier for tax cuts and government expenditures were 0.7 and 1.59.

Step-by-step explanation:

At the arrival of Obama's administration, the plan for all dollar that would be spent by the government was expected to have a turn around and the rest dollars going into savings. This was also expected for individuals. This was termed the Multiplier Effect.

It was estimated by the Obama administration that spending would have a bigger multiplier of 1.59 than tax cuts 0.99.