Expansionary Fiscal Policy Is Enhanced by the Multiplier Effect,but Compromised

question 232

True/False

Expansionary fiscal policy is enhanced by the multiplier effect,but compromised by the crowding out effect.

---

Definitions:

Discount

A reduction from the usual cost of something or the process of determining the present value of future cash flows.

Political Risk

In international business, the chance that the value of a firm’s investment in a foreign country will be reduced by political actions of either the foreign government or terrorists.

Exchange Rate Risk

The risk that international trade dealings will earn less than expected because of movement in exchange rates.

Economic Risk

The possibility of loss caused by macroeconomic or market conditions, such as changes in interest rates or recessions.