Why Might Increases in Government Spending Be Ineffective During a Recession

question 125

Multiple Choice

Why might increases in government spending be ineffective during a recession?

• A)The level of aggregate demand will not affect output and employment during a recession.
• B)Increases in government spending cannot stimulate aggregate demand.
• C)According to the Keynesian view,fiscal policy will be largely ineffective during a recession.
• D)Recessions often reflect a coordination problem related to the composition of aggregate demand,not just its level.

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Definitions:

Distorted Perception

An inaccurate view or interpretation of something, often due to psychological factors affecting the perception of reality.

Antisocial Personality Disorder

A mental disorder characterized by a long-term pattern of disregard for, or violation of, the rights of others.

Agreeableness

A personality trait in the Big Five model characterized by qualities of kindness, cooperation, and warmth.

Conscientiousness

A personality trait characterized by being organized, dependable, and disciplined.