In preparing their estimates of the stimulus package's effect on GDP,Obama administration economists estimated a government purchases multiplier of 1.57.Economist Robert Barro argues that during wartime,the government purchases multiplier would be ________ the administration's estimate,and economists Lawrence Christiano,Martin Eichenbaum,and Sergio Rebelo argued that when short-term interest rates are near zero,the multiplier would be ________ the administration's estimate.
A)higher than;lower than
B)lower than;higher than
C)higher than;equal to
D)equal to;lower than

Question

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Barro argues that during wartime, the multiplier would be lower than the administration's estimate because the resources used for government purchases would have otherwise been used for producing private goods and services. On the other hand, Christiano, Eichenbaum, and Rebelo argue that when short-term interest rates are near zero, the multiplier would be higher than the administration's estimate because monetary policy cannot be used to offset the effects of fiscal policy.

In Preparing Their Estimates of the Stimulus Package's Effect on GDP,Obama