If Policy Makers Implement Expansionary Fiscal Policy and Do Not

question 43

Multiple Choice

If policy makers implement expansionary fiscal policy and do not take into account crowding out, equilibrium GDP is likely to:

• A)be at potential GDP.
• B)be above potential GDP.
• C)be below potential GDP.
• D)cause an inflationary gap.

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Definitions:

Inventory

The total amount of goods and materials held by a business for the purpose of resale or production.

Non-inventory

Refers to items or services sold by a business that are not kept in inventory, such as consulting services.

Allowance Method

An accounting technique used to estimate and account for doubtful accounts receivable.

Uncollectible Accounts Expense

An expense reported on the income statement, pertaining to the debt owed to a company that is unlikely to be recovered.