If investment spending is relatively insensitive to changes in the interest rate, then the most effective expansionary policy would be

Question

Quizplus · Accepted Answer

When investment spending is relatively insensitive to changes in the interest rate, a fiscal policy such as a personal income tax cut (D) is more effective in stimulating the economy because it directly increases consumers' disposable income, leading to higher consumption and aggregate demand.

If Investment Spending Is Relatively Insensitive to Changes in the Interest