$$0$ 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?

neither government spending changes nor tax changes

both government spending changes and tax changes

government spending changes only

tax changes only

Assume a marginal propensity to consume $($MPC$)$ of $0\mathrm{.}5.$

Which discretionary fiscal policy would have a more pronounced impact on the economy?

A $900$ billion dollar increase in government spending, or a $900$ billion dollar tax cut, would both have an equal impact on the economy.

A $900$ billion dollar tax cut would have a more pronounced impact on the economy.

A $900$ billion dollar increase in government spending would have a more pronounced impact on the economy.