Critics of the Keynesian View Argue That Increases in Government

question 121

Multiple Choice

Critics of the Keynesian view argue that increases in government spending financed by borrowing will hamper the recovery from a recession and  slow long term growth because

• A) more spending and debt will lead to higher future taxes to cover the cost of government and the interest on the debt.
• B) government spending is directed by political forces, rather than efficient cost-revenue comparisons.
• C) more political spending will lead to more wasteful rent-seeking activities  and less production of goods and services that people value.
• D) All of the above are true.

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Definitions:

Moderate Changes

Alterations or adjustments that are neither minor nor major, but fall in the middle range in terms of their impact or intensity.

Labour Costs

are the expenses incurred by employers for the work done by employees, including wages, benefits, and taxes related to employment.

Kiln

A furnace or oven for burning, baking, or drying, especially one for calcining lime or firing pottery.