In 2008-2009, Which of the Following Weakened the Demand Stimulus

question 145

Multiple Choice

In 2008-2009, which of the following weakened the demand stimulus effects of expansionary fiscal policy?

• A) The unwillingness of the federal government to run budget deficits.
• B) The heavy indebtedness of American households.
• C) A high level of household spending on big-ticket items such as houses and cars, which do not promote economic growth.
• D) The continuation of the high saving rates on the part of Americans.

---

Definitions:

Call Option

A deal in the financial industry that bestows upon the buyer the latitude, but exempts them from the necessity, to acquire stocks, bonds, commodities, or other assets at a price fixed in advance, within a predetermined time frame.

Warrants

Financial instruments that give the holder the right, but not the obligation, to buy a company's stock at a specific price before a specified date.

Publicly Traded Bonds

Bonds issued by companies or governments that are available for purchase and sale on public stock exchanges.

Long-Term

Pertains to a time frame extending over a significant period, usually beyond one year, often used in the context of investments, loans, and planning.