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In the Keynesian-Cross Model, Fiscal Policy Has a Multiplied Effect

Question 120

Multiple Choice

In the Keynesian-cross model, fiscal policy has a multiplied effect on income because fiscal policy:


A) increases the amount of money in the economy.
B) changes income, which changes consumption, which further changes income.
C) is government spending and, therefore, more powerful than private spending.
D) changes the interest rate.

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