A Federal Reserve publication argues that the size of the multiplier "depends on the type of fiscal policy changes in question and the environment in which they are implemented."
a. What does the author mean by "the type of fiscal policy changes in question"? Why does the type of policy matter for the size of the multiplier?
b. What does the author mean by "the environment in which they are implemented"? Would the size of the multiplier be affected by how close real GDP is to potential GDP? Briefly explain.