Which of These Is NOT a Cost of Using Fiscal

question 213

Multiple Choice

Which of these is NOT a cost of using fiscal or monetary policy to address a jobless recovery?

• A) Expansionary monetary policy may lead to inflation in the long run.
• B) Government spending might crowd out spending by consumers and firms.
• C) Lower interest rates encourage consumers to increase spending.
• D) Cutting taxes and increasing government spending increases the national debt.

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Definitions:

Arousal

A physiological and psychological state of being awake or reactive to stimuli, involving the brain, hormones, and physical responses.

Physical Arousal

The bodily response to stimuli, characterized by increased heart rate, blood pressure, and often associated with sexual excitation.

Labeling

The process of classifying or describing someone or something in a specific way, often based on preconceived notions.

Schachter and Singer

Psychologists known for their theory on emotion, proposing that physiological arousal and cognitive labeling based on environmental context jointly contribute to the experience of emotions.