Based on the percentage spent out of their marginal income, the country where fiscal policy would be more effective is Country A
The country where fiscal policy would be more effective is the one that has a higher multiplier.
Multiplier is calculated as:
= 1 / ( 1 - Marginal propensity to consume)
Marginal propensity to consume is the percentage spent out of marginal income.
Country A multiplier:
= 1 / ( 1 - 80%)
= 5
Country B multiplier:
= 1 / ( 1 - 60%)
= 2.5
In conclusion, fiscal policies would be more effective in Country A.
Find out more at https://brainly.com/question/17012705.