Fiscal policy and the crowding-out effect stresses

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Reference no: EM131193585

The crowding-out effect stresses that

a. a budget deficit is a highly effective tool with which to combat recessions.

b. additional government borrowing to finance a larger deficit will increase the demand for loanable funds, causing real interest rates to rise.

c. an increase in taxes will restrain aggregate demand, and thereby, help to control inflation.

d. an increase in government expenditures will stimulate aggregate demand and, thereby, help to prevent recessions.

2. Fiscal policy is

a. the operation of business enterprises by the government.

b. the deliberate control of the money supply to achieve macroeconomic goals.

c. the use of the government's regulatory powers to improve economic efficiency.

d. the use of government taxation and expenditures to achieve macroeconomic goals.

Reference no: EM131193585

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