An Expansionary Fiscal Policy That Takes the Form of an Increase

question 73

Multiple Choice

An expansionary fiscal policy that takes the form of an increase in government purchases carries the possibility that private investment ________ and,as a result,the future growth rate of ________.

• A)rises to an unsustainable level; real GDP is reduced
• B)is crowded out; corporate tax revenue is reduced
• C)increases; aggregate demand increases
• D)increases; net exports increases
• E)is crowded out; potential output is reduced

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Definitions:

Compulsory Licenses

Licenses issued by the government allowing someone else to use a patent or copyrighted work without the consent of the owner under certain conditions.

Adjustment

The process of adapting or becoming accustomed to a new situation, environment, or condition.

Self-Esteem

Refers to an individual's subjective evaluation of their own worth or value.

Labor Market

The arena where employers seek potential employees who offer their services for wages, salaries, or other forms of compensation.