Question: Economists in the Obama administration estimated that the government stimulus package in 2016 has a multiplier value of 1.57, while other economists have estimated the multiplier to be only 0.61.
a. Briefly explain how the government spending multiplier can have a value less than 1.
b. Why does an estimate of the size of the multiplier matter in evaluating the effects of an expansionary fiscal policy?
c. Which types of government spending have high multiplier effects and which types have low multiplier effects?