If the crowding-out effect is strong, how will the potency of discretionary fiscal policy be affected?
A. It will make fiscal policy more potent.
B. It will make fiscal policy less potent.
C. The potency of fiscal policy will be unaffected.
D. The potency of only contractionary fiscal policy will be reduced.
Answer: B
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In the 1950s and 1960s the European unemployment rate tended to be ________ the U.S. unemployment rate, while in the 1990s the European unemployment rate tended to be ________ the U.S. unemployment rate.
A. higher than; higher than B. lower than; lower than C. higher than; lower than D. lower than; higher than
In 2009, Congress passed a bill that involved government spending increases and tax cuts with the purpose of stimulating the U.S. economy. This policy is an example of
A) an automatic stabilizer. B) contractionary fiscal policy. C) expansionary fiscal policy. D) expansionary monetary policy.
Suppose the interest rate is 7 percent. Consider four payment options: Option A: $500 today. Option B: $550 one year from today. Option C: $575 two years from today. Option D: $600 three years from today. Which of the payments has the highest present value today?
a. Option A b. Option B c. Option C d. Option D
If tax cuts are stimulative, tax increases are
A. reactionary. B. contractionary. C. deflationary. D. inflationary.