An Expansionary Fiscal Policy Is Likely to Be More Effective

question 32

Multiple Choice

An expansionary fiscal policy is likely to be more effective if:

• A) the government increases its spending on imports.
• B) the economy is running at its full employment level of output.
• C) the government increases its spending on locally produced goods and services.
• D) the government increases income tax rates.

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Definitions:

Finished Goods

Products that have completed the manufacturing process but have not yet been sold to customers.