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

question 120

Multiple Choice

In the Keynesian-cross model, fiscal policy has a multiplied 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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Definitions:

Selective Attention

The cognitive process of focusing on specific stimuli while ignoring others, influencing how information is perceived and processed.

Selective Attention

The cognitive process of focusing on certain stimuli in the environment while ignoring others.

Perception

The process by which individuals organize and interpret sensory information to give meaning to their environment.

Negative Reinforcement

A behavioral strategy that involves the removal of an unpleasant stimulus to increase the likelihood of a desired response.