The OECD estimates that the multiplier of government investment in infrastructure can be between 0.9 and 1.3. Based on t
Posted: Thu May 05, 2022 6:34 am
The OECD estimates that the multiplier of government investment
in infrastructure can be between 0.9 and 1.3. Based on this
information, if the economy is at full employment and the
government spends $10 million on building new infrastructure to
help the economy, in the long-run:
GDP must decrease because of the crowding-out effect.
we cannot say for sure how much GDP will increase because we do
not know the relative sizes of the crowding-in and crowding-out
effects.
GDP must increase by less than $10 million because of the
crowding-out effect.
GDP must increase by more than $10 million because of the
crowding-in effect.
GDP must remain unchanged because the crowding-in effect will
just cancel out the crowding-out effect.
in infrastructure can be between 0.9 and 1.3. Based on this
information, if the economy is at full employment and the
government spends $10 million on building new infrastructure to
help the economy, in the long-run:
GDP must decrease because of the crowding-out effect.
we cannot say for sure how much GDP will increase because we do
not know the relative sizes of the crowding-in and crowding-out
effects.
GDP must increase by less than $10 million because of the
crowding-out effect.
GDP must increase by more than $10 million because of the
crowding-in effect.
GDP must remain unchanged because the crowding-in effect will
just cancel out the crowding-out effect.