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ases and government spending differ in terms of their effect on GDP? Why is it important to try to determine the size of the fiscal policy multiplier?...
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How do government purchases and government spending differ in terms of their effect on GDP?

  1. Why is it important to try to determine the size of the fiscal policy multiplier?
  2. Suppose an economy has an inflationary gap. How does the government's actual budget deficit or surplus compare to the deficit or surplus it would have at potential output?
  3. Suppose the president was given the authority to increase or decrease federal spending by as much as $100 billion in order to stabilize economic activity. Do you think this would tend to make the economy more or less stable?

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