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Themultiplier effect in fiscal policy implies that:
The
multiplier effect in fiscal policy implies that:
Onlymonetary policy can stimulate the economy
Only
monetary policy can stimulate the economy
A change in government spending causesa greater change in GDP
A change in government spending causes
a greater change in GDP
Taxincreases reduce GDP at a constant rate
Tax
increases reduce GDP at a constant rate
Everydollar of government spending increases GDP by less than one dollar
Every
dollar of government spending increases GDP by less than one dollar
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