32. a. b. 31. What is the maximum change in equilibrium real GDP that could occur as result of a one-time $50 billion tax cut if the MPC is 0.75? C. d. b. 6/8 C. An example of automatic fiscal policy is: a. d. 100% $200 billion decrease $200 billion increase $150 billion decrease $150 billion increase + | an increase in the number of people receiving unemployment benefits during an economic downturn. Congress approving a government spending increase in order to stimulate aggregate demand when the economy is in a recession. lower interest rates leading to increases in private consumption and investment spending. the President issuing an executive order limiting the ability of people to become U.S. citizens.

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Fiscal Policy and Money Market

Fiscal policy is one of the important tools that is used by the government to control inflation or aggregate demand in the economy. Under this policy, there are two rules which are used by the government, one is the expenditure of the government and the other is the taxation or income of the government which it collects from the public.