Fiscal policy The British government is considering to issue a 10 billion GBP fiscal stimulus in the British economy. We have the information that the British people tend to save only 20% of their extra income and spend the rest of it. The spending multiplier in the British economy is 5 . Therefore, the proposed 10 billion GBP increase in government spending generates 50 billion, GBP of increased demand for goods and services. This extra demand is the consequence of the The fiscal stimulus also generates another effect, called the Ices the calculated increase in the multiplier effect demand. This effect depends on many factors crowding out effect