The Growth Rate of Potential Output Might Be Decreased by an Expansionary

question 56

Multiple Choice

The growth rate of potential output might be decreased by an expansionary fiscal policy if

• A)the policy crowds out private investment.
• B)public investment has high productivity.
• C)the simple multiplier is small.
• D)the composition of output is not altered.
• E)the budget deficits are persistent.

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Definitions:

Lockbox Plan

A banking service that speeds up collection and processing of company receipts by having those payments mailed directly to a location accessible by the bank.

Collection Of Cheques

Collection of Cheques refers to the process banks undertake to collect the amount specified on a cheque from the bank upon which the cheque is drawn.

Collections Float

The time gap between when a check is deposited into a bank account and the funds are available for use.

Cash Management System

A suite of services and tools used by businesses to manage their cash flow, including collection services, disbursement services, and liquidity management.