1. Explain the Keynesians objections to fixed rules for fiscal policy, such as a constitutional amendment that would mandate a balanced federal budget. 2. Suppose that the marginal propensity to...

1. Explain the Keynesians’ objections to fixed rules for fiscal policy, such as a constitutional amendment that would mandate a balanced federal budget.

2. Suppose that the marginal propensity to consume out of disposable income is 0.8 and the marginal income tax rate is 0.1. What is the value of the autonomous expenditure multiplier? Now suppose that the marginal income tax rate rises to 0.2. What is the new value of the multiplier? Explain the difference.