The Effectiveness of Fiscal Policy as a 'Pump Primer' Is

question 31

Multiple Choice

The effectiveness of fiscal policy as a 'pump primer' is dependent on:

• A) business confidence
• B) the crowding out effect
• C) the marginal propensity to withdraw
• D) random shocks

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Definitions:

Exchange Rates

The value of one currency for the purpose of conversion to another, determining how much one currency is worth in terms of another.

Interest Rates

The cost of borrowing money or the return earned on an investment, usually expressed as a percentage.

Inflation

The rate at which the general level of prices for goods and services is rising, and, consequently, purchasing power is falling.