Suppose a hypothetical economy is currently in a situation of deficient aggregate demand of $64 billion. four economists agree that expansionary fiscal policy can increase total spending and move the economy out of recession, but they are debating which type of expansionary policy should be used.-economist a believes that the government spending multiplier is 8 and the tax multiplier is 4.
-economist b believes that the government spending multiplier is 4 and the tax multiplier is 2.
-compute the amount the government would have to increase spending to close the output gap according to each economist's belief. then, for each scenario, compute the size of the tax cut that would achieve this same effect. economist c favors tax cuts over increases in government spending. this means that economist c likely believes that: a. a dollar in tax cuts immediately and fully adds to aggregate demand. b. tax cuts induce investment spending and improve workers' incentives. economist d argues that it is not possible to move the economy out of recession by increasing government spending. which of the following statements is consistent with economist d's belief? a. a rise in government spending does not crowd out private sector spending. b. a rise in government spending completely crowds out private sector spending.