Two economists estimate the government expenditure multiplier and come up with different results. One estimates the multiplier at 0.8, while the other comes up wit| an estimate of 1.4. Explain why these estimates are different in terms of the assumptions that each economist is making. A. Compared to the first economist, the second economist must be assuming either a larger induced increase in consumption, a smaller crowding out effect, or both. B. Compared to the first economist, the second economist must be assuming either a smaller induced increase in consumption, a larger crowding out effect, or both. C. Compared to the first economist, the second economist is assuming a longer time frame for the effects of the increased expenditure to be observed. D. Unlike the first economist, the second economist must be assuming that the government expenditure is devoted to useful projects. If the current value of GDP is $13.28 trillion and the government is planning to increase spending by $800 billion (all in one year), the percentage increase in GDP us the multiplier estimate of the first economist is percent. (Round your response to two decimal places.) ppose the Fed sells $5 billion worth of Treasury bonds to Barclays. mplete the following table showing the balance sheet of Barclays before and er this sale. Balance sheet of Barclays Assets Liabilities and Shareholder's Equity Deposits and other $900 billion liabilities: Reserves: $150 billion Before Bonds and other investments: $850 billion Shareholder's equity: $100 billion Total assets: $1,000 billion Liabilities + shareholder's equity: $1,000 billion Assets Liabilities and Shareholder's Equity Deposits and other $ 900 billion liabilities: Reserves: $ 145 billion After Bonds and other investments: $ 855 billion Shareholder's equity: $ 100 billion Total assets: $ 1000 billion Liabilities + shareholder's equity: $ 1000 billion mplete the following table showing the balance sheet of the Fed before and After Bonds and other investments: $ 855 billion Shareholder's equity: $ 100 billion Total assets: $ 1000 billion Liabilities + shareholder's equity: $ 1000 billion mplete the following table showing the balance sheet of the Fed before and er this sale. Balance sheet of the Fed Assets Liabilities and Shareholder's Equity Treasury bonds: $2,000 billion Reserves: $2,000 billion Before Other bonds: $1,000 billion Currency: $1,000 billion Total assets: $3,000 billion Total liabilities: $3,000 billion Assets Liabilities and Shareholder's Equity Treasury bonds: $ billion Reserves: $ billion After Other bonds: $ billion Currency: $ billion Total assets: billion Total liabilities: $ billion Two economists estimate the government expenditure multiplier and come up with different results. One estimates the multiplier at 0.8, while the other comes up wit| an estimate of 1.4. Explain why these estimates are different in terms of the assumptions that each economist is making. A. Compared to the first economist, the second economist must be assuming either a larger induced increase in consumption, a smaller crowding out effect, or both. B. Compared to the first economist, the second economist must be assuming either a smaller induced increase in consumption, a larger crowding out effect, or both. C. Compared to the first economist, the second economist is assuming a longer time frame for the effects of the increased expenditure to be observed. D. Unlike the first economist, the second economist must be assuming that the government expenditure is devoted to useful projects. If the current value of GDP is $13.28 trillion and the government is planning to increase spending by $800 billion (all in one year), the percentage increase in GDP us the multiplier estimate of the first economist is percent. (Round your response to two decimal places.) ppose the Fed sells $5 billion worth of Treasury bonds to Barclays. mplete the following table showing the balance sheet of Barclays before and er this sale. Balance sheet of Barclays Assets Liabilities and Shareholder's Equity Deposits and other $900 billion liabilities: Reserves: $150 billion Before Bonds and other investments: $850 billion Shareholder's equity: $100 billion Total assets: $1,000 billion Liabilities + shareholder's equity: $1,000 billion Assets Liabilities and Shareholder's Equity Deposits and other $ 900 billion liabilities: Reserves: $ 145 billion After Bonds and other investments: $ 855 billion Shareholder's equity: $ 100 billion Total assets: $ 1000 billion Liabilities + shareholder's equity: $ 1000 billion mplete the following table showing the balance sheet of the Fed before and After Bonds and other investments: $ 855 billion Shareholder's equity: $ 100 billion Total assets: $ 1000 billion Liabilities + shareholder's equity: $ 1000 billion mplete the following table showing the balance sheet of the Fed before and er this sale. Balance sheet of the Fed Assets Liabilities and Shareholder's Equity Treasury bonds: $2,000 billion Reserves: $2,000 billion Before Other bonds: $1,000 billion Currency: $1,000 billion Total assets: $3,000 billion Total liabilities: $3,000 billion Assets Liabilities and Shareholder's Equity Treasury bonds: $ billion Reserves: $ billion After Other bonds: $ billion Currency: $ billion Total assets: billion Total liabilities: $ billion
