In the IS-LM model,the fiscal multiplier effect can be increased by
A)larger increases in government expenditure.
B)expansions of the money supply.
C)contractions of the money supply.
D)raising the income tax rate.

Question

Quizplus · Accepted Answer

Expansions of the money supply can increase the fiscal multiplier effect by lowering interest rates, which stimulates investment and consumption, enhancing the impact of fiscal policy.

In the IS-LM Model,the Fiscal Multiplier Effect Can Be Increased