If a policymaker wants to stimulate the economy, a ________ would be preferable to a ________.

Question

Quizplus · Accepted Answer

A higher MPC (Marginal Propensity to Consume) means that more of the additional income will be spent, thus leading to more spending in the economy and ultimately stimulating it. On the other hand, a lower MPC means that people are more likely to save their additional income, which would not be as effective in stimulating the economy. Therefore, a high MPC would be preferable to a low MPC when trying to stimulate the economy.

If a Policymaker Wants to Stimulate the Economy, a ________