Expansionary fiscal policy
A) can be effective in the short run.
B) causes complete crowding out in the short run.
C) is never effective because of crowding out.
D) can be effective in the long run.
Answer: A
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There is greater support for passive policymaking when
A) price flexibility is common. B) wage flexibility is common. C) pure competition is widespread. D) all of the above.
With asymmetric information among consumers and positive search costs c, all the other firms in the market are charging a monopoly price Pm. A firm may lower its price
A) by less than c to attract more buyers when there are many firms in the market. B) by more than c to attract more buyers when there are many firms in the market. C) by less than c to attract more buyers when there are few firms in the market. D) by more than c to attract more buyers when there are few firms in the market.
The change in the quantity of aggregate output demanded depends on how much the aggregate expenditure line shifts, not on which spending component causes the shift
Indicate whether the statement is true or false
Perfect competition is a market in which no buyer or seller has market power.
Answer the following statement true (T) or false (F)