Which of the Following Attributes of the Recession of 2008-2009

question 87

Multiple Choice

Which of the following attributes of the recession of 2008-2009 is most supportive of the Keynesian view that the crowding-out effect will be minimal during a severe recession?

• A) the immediate increase in output and employment generated by the budget deficits of 2008-2009
• B) the decline in the general level of prices during 2009
• C) short-term interest rates falling to near zero, despite growing budget deficits during 2008-2009
• D) short-term interest rates falling to near zero, as the budget deficit declined during 2008-2009