Consider Two Fiscal Policy Actions

question 33

Multiple Choice

Consider two fiscal policy actions.
I. a $400 billion reduction in income taxes
II. a $400 billion increase in government purchases
Which policy will have a bigger impact on aggregate demand?

• A) Both policies will have the exact same impact.
• B) Policy II because it affects aggregate demand directly.
• C) Policy I because it affects disposable income directly.
• D) Policy I because it works through consumption which is the largest component of aggregate demand.

---

Definitions:

Brain Size

The physical volume or mass of the brain, often associated with cognitive abilities and intelligence across different species.

Genetic Diversity

The total number of genetic characteristics in the genetic makeup of a species, contributing to its ability to adapt to its environment.

Founder Effect

A form of genetic drift where a new population is established by a very small number of individuals, leading to reduced genetic variation from the original population.

Human Populations

Groups of humans living in a specific geographic area, characterized by shared genetics, culture, and societal structures.