Increases in government purchases of goods and services, G, and cuts in taxes, T, can have...

Increases in government purchases of goods and services, G, and cuts in taxes, T, can have a larger effect on aggregate demand. This is called the ____________________________ effect. This effect will be greater, the (higher, lower) the marginal propensity to consume is. (2 points; 1 point each)

While an increase in G or a cut in T, by raising incomes and the demand for money, also raise interest rates and reduce investment spending. This effect of higher G or lower T is called __________________________________. (1 point)

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Rahul Sunny answered 1 year ago

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