The USFiscal Stimulus in 2009 Did Not Increase GDP Substantially Because

question 82

Multiple Choice

The U.S.fiscal stimulus in 2009 did not increase GDP substantially because

• A)the Federal Reserve was decreasing interest rates and real-world estimates for the multiplier might be less than one.
• B)the Federal Reserve was increasing interest rates and real-world estimates for the multiplier might be less than one.
• C)state governments were decreasing spending and real-world estimates for the multiplier might be less than one.
• D)state governments were increasing spending and real-world estimates for the multiplier might be less than one.

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Definitions:

Loan Guarantees

Agreements in which a third party (the guarantor) agrees to repay the debt or perform an obligation if the debtor defaults.

Implicit Call Option

An option embedded in an investment that gives the holder the right but not the obligation to undertake certain actions under specific conditions.

Convertible Bond

A type of bond that can be converted into a predetermined number of shares of the issuing company's equity at certain times during its life, usually at the discretion of the bondholder.

New Shares

New shares refer to additional stock issued by a company, either through public offerings or other means, to raise capital.