Which of the following fiscal policy changes would be the most expansionary?
A) A $40 billion increase in government spending
B) A $20 billion tax cut and $20 billion increase in government spending
C) A $10 billion tax cut and $30 billion increase in government spending
D) A $40 billion tax cut

Question

Quizplus · Accepted Answer

Increasing government spending directly injects money into the economy, leading to a larger multiplier effect compared to tax cuts, which may not be fully spent by consumers.

Which of the Following Fiscal Policy Changes Would Be the Most