The multiplier effect occurs when an initial increase (or decrease) in autonomous expenditure produces a greater increase (or decrease) in real GDP than the initial change. In which type of discretionary fiscal policy does the multiplier play a role? tax changes only neither government spending changes nor tax changes government spending changes only both government spending changes and tax changes Assume a marginal propensity to consume (MPC) of 0.5. Which discretionary fiscal policy would have a more pronounced impact on the economy? A 800 billion dollar increase in government spending, or a 800 billion dollar tax cut, would both have an equal impact on the economy. A 800 billion dollar increase in government spending would have a more pronounced impact on the economy. A 800 billion dollar tax cut would have a more pronounced impact on the economy.

The multiplier effect is produced whenever an initial rise (or decrease) of self-employed market capitalization (or decreases) GDP Growth higher than the original change. Where both increases in public spending or adjustments in taxes are produced by a budgetary monetary strategy, a multiplier mostly on the economy plays a major role in public spending and new taxes.

In question 2:

This marginal demand risk of 0.5 would have a more noticeable influence on financial spending, via an 800 billion dollar increase in government expenditure. This will have more major economic effects on fiscal policy. More noticeable effects of increased spending will have on the aggregate throughout the economy.

mahak08 mahak08 · Answer 2 · 2022-04-05T16:43:50+02:00

The use of government budget funding policies to impact economic factors, particularly macroeconomic variables such as aggregate consumer spending, employment, inflation, and economic growth, is referred to as fiscal policy.

How is a fiscal policy that is discretionarily chosen?

The multiplier impact occurs anytime an initial increase (or drop) in self-employed market capitalization (or reduces) GDP Growth that is greater than the original change.

When a fiscal monetary strategy produces both increases in public expenditure and tax adjustments, a multiplier based primarily on the economy plays a significant role in both public spending and new taxes.

This marginal demand risk of 0.5 would have a greater impact on financial expenditures, resulting in an 800 billion dollar rise in government spending.

This will have a greater impact on budgetary policy. The aggregate consequences of higher expenditure will be more visible throughout the economy.

Thus, Options B and D are correct.

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