Increasing government spending is a contractionary Keynesian economic policy.
Answer the following statement true (T) or false (F)
False
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Exports decrease by $500 billion, investment increases by $300 billion, and government expenditure increases by $200 billion. As a result, autonomous expenditures ________ , total expenditures ________ , and equilibrium real GDP ________
A) increases by $3500 billion; increases; increases by more than $300 billion B) decreases by $200 billion; decreases; decreases by more than $200 billion C) increases by $500 billion; increases; increases by more than $500 billion D) decreases by $300 billion; decreases; decreases by more than $300 billion E) is unchanged; is unchanged; is unchanged
According to John Maynard Keynes' General Theory of Employment, Interest and Money, the government should _____ in order to get an economy out of a depression
a. increase spending b. decrease spending c. reduce subsidies d. increase taxes e. allow the economy to correct itself
Holding all else constant, a country's standard of living will rise if its
A. nominal GDP grows at a faster rate than real GDP. B. nominal GDP grows at a slower rate than real GDP. C. the rate of population growth exceeds the rate of growth of real GDP. D. the rate of population growth is less than the rate of growth of real GDP.
Crowding out, following an increase in government spending, results from (the exchange rate is the foreign exchange price of the domestic currency)
A) higher interest rates and a lower exchange rate. B) higher interest rates and a higher exchange rate. C) lower interest rates and a lower exchange rate. D) lower interest rates and a higher exchange rate.