In the Keynesian-Cross Model, Fiscal Policy Has a Multiplying Effect

question 5

Multiple Choice

In the Keynesian-cross model, fiscal policy has a multiplying effect on income because fiscal policy:

• A)increases the amount of money in the economy.
• B)changes income, which changes consumption, which further changes income.
• C)is government spending and, therefore, more powerful than private spending.
• D)changes the interest rate.

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