The Policy Response to the Recession of 2008-2009 Provided an Experiment

question 15

Multiple Choice

The policy response to the recession of 2008-2009 provided an experiment on the potency of Keynesian fiscal policy. In what respect was this true?

• A) The money supply increased rapidly and the short-term interest rates were pushed to near zero just as the Keynesian model of fiscal policy recommends.
• B) Government spending increased sharply and the budget deficits were large just as the Keynesian model of fiscal policy recommends.
• C) The money supply increased rapidly and the budget was shifted toward a surplus just as the Keynesian model recommends.
• D) The federal budget was balanced just as the Keynesian model indicates would be prudent policy during a recession.

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Definitions:

Desired Behaviors

The specific actions or reactions individuals or groups aim to elicit or encourage through various means, such as incentives or social norms.

Role Ambiguity

A situation in which there is a lack of clarity about role expectations, responsibilities, and/or objectives, often leading to stress and inefficiency.

Role Dynamics

The interactive and changing nature of roles within a group or organization, focusing on how roles are adopted, adapted, and discarded over time.

Team Member

An individual who is part of a group working together towards a common goal, contributing unique skills and perspectives.