Calculate the Impact of the Multiplier Effect In 1993, President Bill Clinton asked
Chapter 15, Problem 36(choose chapter or problem)
Calculate the Impact of the Multiplier Effect In 1993, President Bill Clinton asked Congress to approve an additional $15 billion in spending to repair and upgrade the nations highways. In addition to improving the nations roads, President Clinton argued that this spending would increase output and employment in the economy. Assume that each person who received any of this extra spending as income would have spent 80 percent of it. Describe how the multiplier effect would have increased the total increase in spending to far more than the original $15 billion President Clinton wanted to spend. What does this show about the importance of changes in government spending?
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