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Assume that consumers in economy ZYX spend, on average, 80% to 90% of any new (additional) disposable income to purchase goods and services. Based on a simple 3- sector Keynesian type economy, this might suggest a government expenditures multiplier in the range of 5 to 10, and a tax multiplier in the range of -4 to -9. In this country, the Obama "stimulus package" of some 830 Billion (2009 ARRA) produced nothing even remotely resembling such income increasing results.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91230644

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