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PS4_f09 - Why 2 Show the impact of a $100 Billion federal...

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1. Suppose the marginal propensity to consume in the Netherlands is 0.8. What is the simple government spending multiplier? What is the simple tax multiplier? Would you expect the multiplier to be larger or smaller in the Netherlands, a country highly dependent on trade with other nations, than in the United States?
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Unformatted text preview: Why? 2. Show the impact of a $100 Billion federal budget surplus on the market for loanable funds. 3. Show the impact of the surplus in problem #2 on Aggregate Demand and Aggregate Supply a. In the Short Run b. In the Long Run...
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