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

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A tax cut will be more expansionary when the economy's marginal propensity to save (MPS) is small because this implies a higher marginal propensity to consume (MPC). A higher MPC means that consumers are more likely to spend the additional income from the tax cut, leading to a larger increase in aggregate demand and thus a more expansionary effect on the economy.

If a Government Wants to Pursue an Expansionary Fiscal Policy