The multiplier effect states that there are additional shifts in aggregate demand from fiscal policy, because it a. reduces investment and thereby increases consumer spending. b. increases the money supply and thereby reduces interest rates. c. increases income and thereby increases consumer spending. d. decreases income and thereby increases consumer spending
The multiplier effect states that there are additional shifts in aggregate demand from fiscal policy, because it a. reduces investment and thereby increases consumer spending. b. increases the money supply and thereby reduces interest rates. c. increases income and thereby increases consumer spending. d. decreases income and thereby increases consumer spending
Chapter24: Fiscal Policy
Section: Chapter Questions
Problem 4P
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Question
The multiplier effect states that there are additional shifts in aggregate demand from fiscal policy, because it
a. |
reduces investment and thereby increases consumer spending.
|
|
b. |
increases the money supply and thereby reduces interest rates.
|
|
c. |
increases income and thereby increases consumer spending.
|
|
d. |
decreases income and thereby increases consumer spending.
|
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