The fiscal-policy multiplier will be greater
A)the greater is the interest responsiveness of the demand for money.
B)the smaller is the interest responsiveness of autonomous expenditures.
C)the smaller is the income responsiveness of the demand for money.
D)All of the above tend to make the fiscal-policy multiplier greater.

Question

Quizplus · Accepted Answer

The fiscal-policy multiplier is influenced by various factors related to how changes in fiscal policy (like government spending or taxation) affect the economy. A greater interest responsiveness of the demand for money (A), a smaller interest responsiveness of autonomous expenditures (B), and a smaller income responsiveness of the demand for money (C) all contribute to a larger fiscal-policy multiplier. This is because these conditions tend to enhance the impact of fiscal policy changes on income and output by affecting how money circulates and is spent within the economy.

The Fiscal-Policy Multiplier Will Be Greater