If an Increase in the Federal Deficit Stimulates an Economy

question 175

Multiple Choice

If an increase in the federal deficit stimulates an economy, _____

• A) an expansionary gap exists in the economy.
• B) the crowding in of private investment takes place.
• C) the crowding out of private investment offsets the crowding in of private investment.
• D) the crowding out and crowding in of private investment cancels each other out.
• E) interest rates increase significantly.