Fiscal Multiplier and European Austerity

The fiscal multiplier looks at how much an initial change in injections affects real GDP.� For example, if increased government spending of �1bn causes overall GDP to rise by �1.5bn, the multiplier effect is 1.5 If �1bn worth of tax rises causes real GDP to fall by �0.5bn, the multiplier effect is (0.5) Since 2009, [...]

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