If a Government Wants to Pursue an Expansionary fiScal Policy

question 111

Multiple Choice

If a government wants to pursue an expansionary fiscal policy, then a tax cut of a certain size will be more expansionary when the

• A) economy's MPS is small.
• B) economy's MPS is large.
• C) economy's MPC is small.
• D) unemployment rate is low.

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Definitions:

Hungry Person

An individual experiencing the physical sensation of needing or wanting food, which may affect their mood and behavior.

Dehydration

A condition resulting from excessive loss of body water, impairing normal bodily functions.

Incentive

A positive or negative environmental stimulus that motivates behavior.

Dairy Queen

A chain of soft serve ice cream and fast-food restaurants.