Question
Singapore government has taken various fiscal policy measures tomanage the economic impacts of the COVID-19 pandemic and support the economy through the pandemic-induced recession. a.)
Singapore government has taken various fiscal policy measures tomanage the economic impacts of the COVID-19 pandemic and support the economy through the pandemic-induced recession.
a.) What is the main macroeconomic variable that can affect the size of the multiplier and how? Suppose household saving rate (savings as % of GDP) has increased from 54% in 2019 to 55% in 2020. How would this affect the size of the multiplier effect? strengthen or weaken and why?
B.)Using information available in Part A, what is the value of multiplier for 2020?
Suppose the Singapore government had undertaken fiscal stimulus package, assuming that it increase ingovernment spending, worth $120 billion in 2020.
Calculate the forecast of the overall impact of the government's stimulus package once the full effects are circulated throughout the economy. How to interpret this final number in a sentence?
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