Answer to Question #249784 in Macroeconomics for Prisca Mahlalela

Question

4. An expansionary fiscal policy would most likely cause which of the following changes in output and 

interest rates?

A. Both output and interest rate will increase

B. Output will increase and interest rate falls.

C. Output will fall and interest rate increase.

D. Both output and interest rate will decrease

Answer 1

B. Output will increase and interest rate falls.