Question

The effects of changes in the economy due to fiscal policy that occur as a result of funds not taxed by the governemnt or spent impacts the
national income much greater than one dollar...
A. Multiplier effect
B. Productive capacity
C. Keynesian economics
D. Classical economics

Answer 1

Answer:

The effects of changes in the economy due to fiscal policy show a multiplier effect.

Explanation:

• A downgrading change in the fiscal policy by the government does not limit the effect of the change up to the expenditure of the government, but also adversely affects the rate of investments, consumptions, and spendings at the microeconomic level.

• The effect of the change percolates down to the lower strata of the society and goes on turning adverse as the public refrains itself from investing, consuming, and spending.