The government decreases taxes by $100 million amidst high unemployment. Additionally, the marginal propensity to consume (MPC) is found to be lower than previously estimated. This implies the _____ fiscal policy, becomes _____ effective. contractionary, more expansionary, more contractionary, less expansionary, less expansionary, equally

Fiscal policy is more effective whenCorrect!  the marginal propensity to consume is high  the marginal propensity to consume is low   a fiscal expansion is followed by a monetary contraction   a fiscal expansion is followed by an interest rate hike

A decrease in the MPC may cause ______________.a.A fall in the equilibrium incomeb.An increase in the equilibrium income.c.It does not affect the equilibrium incomed.The government spending multiplier rise

Contractionary fiscal policy will cause gross domestic product to _____ and the interest rate to _____.decrease; increasedecrease; decreaseincrease; increaseincrease; decrease

Assume the economy is at full employment and that investment spending declines dramatically. If the goal is to restore full employment, government fiscal policy should be directed towardMultiple Choicean equality of tax receipts and government expenditures.a reduction of subsidies and transfer payments and an increase in tax rates.an excess of tax receipts over government expenditures.an excess of government expenditures over tax receipts.

Cite and explain one example of the negative effect of fiscal policy.