Can government policy close the gap?
Explore fiscal policy, spending and tax multipliers, automatic stabilizers, budgets and government debt. Move through 12 Learn steps, then practise with 10 worked Solve questions.
Government can buy, tax or transfer
| Policy | First extra spending |
|---|---|
| Purchases +20 | 20 |
| Taxes −20 | 20 × 0.75 = 15 |
| Transfers +20 | 20 × 0.75 = 15 |
Government can buy, tax or transfer
Which policy gives the largest GDP increase?
- Find the three multipliers and each policy’s GDP effect.
- Which policy has the largest effect, and by how much? Explain the first-round difference.
Exam coming up and fiscal policy still feels confusing?
Bring your problem sets. We work through them together until every type feels routine.
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