(Figure: Fiscal Stimulus) The figure shows fiscal stimulus with the multiplier effect. Increased government spending directly boosts aggregate demand, shifting the aggregate demand curve. The extra income earned producing government services then leads to _____ consumption, which further increases aggregate demand when the multiplier is _____.

A) lower; less than one
B) higher; less than one
C) lower; greater than one
D) higher; greater than one
Correct Answer:
Verified
Q37: The multiplier for a change in taxes
Q38: The fiscal multiplier for government spending is
Q39: The fiscal multiplier for government spending is
Q40: Estimates of the multiplier effect indicate that
Q41: The multiplier effect of fiscal policy means
Q43: A leakage occurs in an economy when:
A)
Q44: Which of the following provides an example
Q45: When used in connection with fiscal policy,
Q46: Which of the following terms is used
Q47: According to the permanent income theory, households
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