The crowding-out effect works through interest rates to:
A. decrease the effectiveness of contractionary fiscal policy.
B. decrease the effectiveness of expansionary fiscal policy.
C. increase the effectiveness of expansionary fiscal policy.
D. increase the effectiveness of contractionary fiscal policy.
Answer: B
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The value of the multiplier is likely to fall if there is a decrease in
A. total spending. B. income. C. the marginal propensity to consume. D. consumption.
Why is the unemployment rate never zero, even at full employment?
What will be an ideal response?
Which of the following changes in disposable income would lead to the greatest increase in consumption?
a. a $20,000 increase in disposable income, if MPC equals 0.5 b. a $12,000 increase in disposable income, if MPC equals 0.75 c. a $15,000 increase in disposable income, if MPC equals 0.6 d. a $30,000 increase in disposable income, if MPC equals 0.25
The poorest countries in Africa have some of the highest growth rates, thus proving the convergence hypothesis
a. True b. False Indicate whether the statement is true or false