The effectiveness of any stimulus program depends on _____
A) the size of the tax cuts.
B) the size of the tax increases.
C) the size of the tax and spending multipliers.
D) the size of the budget deficit.
E) the size of the budget surplus.

Question

Quizplus · Accepted Answer

The effectiveness of any stimulus program depends on the size of the tax and spending multipliers. Tax and spending multipliers represent the amount that GDP changes in response to changes in taxes and government spending. A larger multiplier indicates a greater impact on GDP, and therefore a more effective stimulus program. The size of tax cuts or increases, as well as the size of the budget deficit or surplus, are important factors but the size of multipliers takes the lead.

The Effectiveness of Any Stimulus Program Depends on _____