That same day, Boasberg held an emergency hearing and told the administration to pause the migrant removals and order the return of deportation flights back to the US. Answer the question(s) below to see how well you understand the topics covered in the previous section. This short quiz does not count toward your grade in the class, and you can retake it an unlimited number of times. “The Constitution does not tolerate willful disobedience of judicial orders – especially byofficials of a coordinate branch who have sworn an oath to uphold it,” Boasberg, an appointee of former President Barack Obama, wrote in his ruling.
Because athletes are often high earners with short careers, let’s assume that they save one-third of their after-tax income. To understand how the multiplier effect works, return to the example in which the current equilibrium in the Keynesian cross diagram is a real GDP of $700, or $100 short of the $800 needed to be at full employment, potential GDP. If the government spends $100 to close this gap, someone in the economy receives that spending and can treat it as income.
The administration has repeatedly said that federal trial-level courts, especially, lack the authority to issue orders that could encroach on the president’s immigration policy decisions. Boasberg also cast doubt on the administration’s invocation of the state secrets privilege to avoid giving him a number of details on the flights that he wanted as he worked to decide whether his commands had been violated. The judge, however, ultimately determined that the information the government sought to shield wasn’t necessary to reach his conclusion in the contempt issue. Attracting professional sports teams and building sports stadiums to create jobs and stimulate business growth is an economic development strategy adopted by many communities throughout the United States. In his recent article, “Public Financing of Private Sports Stadiums,” James Joyner of Outside the Beltway looked at public financing for NFL teams. Joyner’s findings confirm the earlier work of John Siegfried of Vanderbilt University and Andrew Zimbalist of Smith College.
Practice more questions on Physics
- The ruling from Boasberg comes as the Trump administration continues to test how far it can push its compliance with court orders it disagrees with.
- In his recent article, “Public Financing of Private Sports Stadiums,” James Joyner of Outside the Beltway looked at public financing for NFL teams.
- Assume that those who receive this income pay 30% in taxes, save 10% of after-tax income, spend 10% of total income on imports, and then spend the rest on domestically produced goods and services.
- These changes will reduce aggregate expenditures, and then will have an even larger effect on real GDP because of the multiplier effect.
- Siegfried and Zimbalist make the plausible argument that, within their household budgets, people have a fixed amount to spend on entertainment.
If these general assumptions hold true, then money spent on professional sports will have less local economic impact than money spent on other forms of entertainment. Of that 60 cents, one-third is saved, leaving 40 cents, and half is spent outside the area, leaving 20 cents. Of the rest, 20% is saved, leaving 52 cents, and of that amount, 65% is spent in the local area, so that 33.8 cents of each dollar of income is recycled into the local economy. Now, consider the impact of money spent at local entertainment venues other than professional sports. While the owners of these other businesses may be comfortably middle-income, few of them are in the economic stratosphere of professional athletes. Because their incomes are lower, so are their taxes; say that they pay only 35% of their marginal income in taxes.
Test of Trump compliance with the courts
With a higher multiplier, government policies to raise or reduce aggregate expenditures will have a larger effect. Thus, a low multiplier means a more stable economy, but also weaker government macroeconomic policy, while a high multiplier means a more volatile economy, but also an economy in which government macroeconomic policy is more powerful. Say that business confidence declines and investment falls off, or that the economy of a leading trading partner slows down so that export sales decline. These changes will reduce aggregate expenditures, and then will have an even larger effect on real GDP because of the multiplier effect.
MULTIPLIER TRADEOFFS: STABILITY VERSUS THE POWER OF MACROECONOMIC POLICY
They do not have the same ability, or need, to save as much as professional athletes, so let’s assume their MPC is just 0.8. Finally, because more of them live locally, they will spend a higher proportion of their income on local goods—say, 65%. However, with a low multiplier, government policy changes in taxes or spending will tend to have less impact on the equilibrium level of real output.
Legal
Assume that those who receive this income pay 30% in taxes, save 10% of after-tax income, spend 10% of total income on imports, and then spend the rest on domestically produced goods and services. Now, compare the vertical shift upward in the which of the given multipliers will cause aggregate expenditure function, which is $47, with the horizontal shift outward in real GDP, which is $100 (as these numbers were calculated earlier). However, many professional athletes do not live year-round in the city in which they play, so let’s say that one-half of the money that they do spend is spent outside the local area. One can think of spending outside a local economy, in this example, as the equivalent of imported goods for the national economy. The size of the multiplier is determined by what proportion of the marginal dollar of income goes into taxes, saving, and imports. These three factors are known as “leakages,” because they determine how much demand “leaks out” in each round of the multiplier effect.
If the leakages are relatively small, then each successive round of the multiplier effect will have larger amounts of demand, and the multiplier will be high. Conversely, if the leakages are relatively large, then any initial change in demand will diminish more quickly in the second, third, and later rounds, and the multiplier will be small. Changes in the size of the leakages—a change in the marginal propensity to save, the tax rate, or the marginal propensity to import—will change the size of the multiplier. Boasberg, who is the chief judge of the federal trial-level court in DC, outlined the next steps in the contempt proceeding, since it is not proven yet beyond a reasonable doubt that the administration committed criminal contempt. A change in spending of $100 multiplied by the spending multiplier of 2.13 is equal to a change in GDP of $213.
Which of the following multipliers will cause a number to be increased by 25.3% ?
- The administration has repeatedly said that federal trial-level courts, especially, lack the authority to issue orders that could encroach on the president’s immigration policy decisions.
- A change in spending of $100 multiplied by the spending multiplier of 2.13 is equal to a change in GDP of $213.
- The judge, however, ultimately determined that the information the government sought to shield wasn’t necessary to reach his conclusion in the contempt issue.
- If this assumption holds true, then money spent attending professional sports events is money that was not spent on other entertainment options in a given metropolitan area.
Not coincidentally, this result is exactly what was calculated in Figure after many rounds of expenditures cycling through the economy. With a high multiplier, any change in aggregate demand will tend to be substantially magnified, and so the economy will be more unstable. With a low multiplier, by contrast, changes in aggregate demand will not be multiplied much, so the economy will tend to be more stable. In an Expenditure-Output Model The power of the multiplier effect is that an increase in expenditure has a larger increase on the equilibrium output. Fortunately for everyone who is not carrying around a computer with a spreadsheet program to project the impact of an original increase in expenditures over 20, 50, or 100 rounds of spending, there is a formula for calculating the multiplier.
Boasberg says he wants sworn statements first from people who can attest to the officials making the decisions not to turn the planes around as they carried migrants to El Salvador on March 15. The court’s 5-4 ruling requires those wanting to bring such challenges to rely on a complicated and rarely successful legal process known as habeas corpus, and to potentially file those claims in some of the most conservative federal courts in the nation. The ruling from Boasberg comes as the Trump administration continues to test how far it can push its compliance with court orders it disagrees with.
A quick Internet search for “economic impact of sports” will yield numerous reports questioning this economic development strategy. As shown in the calculations in Figure B.10 and Table B.4, out of the original $100 in government spending, $53 is left to spend on domestically produced goods and services. Those who receive that income also pay 30% in taxes, save 10% of after-tax income, and spend 10% of total income on imports, as shown in Figure B.10, so that an additional $28.09 (that is, 0.53 × $53) is spent in the third round. The people who receive that income then pay taxes, save, and buy imports, and the amount spent in the fourth round is $14.89 (that is, 0.53 × $28.09). They considered the amount of taxes paid and dollars spent locally to see if there was a positive multiplier effect. Since most professional athletes and owners of sports teams are rich enough to owe a lot of taxes, let’s say that 40% of any marginal income they earn is paid in taxes.
In other cases where it appeared the administration had violated judicial edicts, judges have not gotten to the point Boasberg arrived at Wednesday. The long-awaited decision on Wednesday from a judge President Donald Trump and his allies have repeatedly attacked puts the administration on the path toward being punished for thwarting court orders. The judge could then, he says, ask the Justice Department to prosecute Trump administration officials, or he could appoint an attorney as a special prosecutor. Despite the high court’s decision, Boasberg said in his ruling, it’s a longstanding concept in the justice system that a party that chooses to disobey a court order before it is wiped away by a subsequent court order can still be punished. The situation has been a major political and legal flashpoint for the Trump White House in its efforts to carry out a historic deportation campaign, especially in mid-March when it sent three planes of migrants to a prison in El Salvador.
Read the following Clear It Up feature to learn how the multiplier effect can be applied to analyze the economic impact of professional sports. Siegfried and Zimbalist make the plausible argument that, within their household budgets, people have a fixed amount to spend on entertainment. If this assumption holds true, then money spent attending professional sports events is money that was not spent on other entertainment options in a given metropolitan area. Since the multiplier is lower for professional sports than for other local entertainment options, the arrival of professional sports to a city would reallocate entertainment spending in a way that causes the local economy to shrink, rather than to grow. Thus, their findings seem to confirm what Joyner reports and what newspapers across the country are reporting.