ch_27_ii - Fiscal Policy Pt II Jason Hockenberry PhD Do...

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Fiscal Policy Pt II Jason Hockenberry PhD
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Do Changes in Spending or Taxes lead to a 1 for 1 Change in GDP? Increasing spending (or lowering taxes) means people will have more money to spend. The change in spending (taxes) will lead to changes in C in the GDP equation, but by how much? Y = C + I + G + (X-M)
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Multiplier effect The series of induced increases in consumption spending that results from an initial increase in autonomous expenditures. Example : Say you get a $1000 stimulus check from the government, and you spend a portion on groceries at the local store. The store owner then spends a portion of the money you paid for groceries on a new sign for the store. The sign maker takes the
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Different Multipliers and the Impacts on GDP Government Purchase Multiplier Tax Multiplier Increases in government purchases and cuts in taxes have a positive multiplier effect on equilibrium real GDP. (expansionary
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Calculating the Multiplier Effect Change in equilibrium real GDP Tax multiplier
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ch_27_ii - Fiscal Policy Pt II Jason Hockenberry PhD Do...

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