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

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Definitions:

Dominant Firms

Companies that have a major portion of market share and can significantly influence market conditions and prices.

New Products

Items or services that have recently been introduced to the market and offer new features, functionalities, or benefits to consumers.

Market Economies

Economic systems in which economic decisions and pricing are guided by the interactions of citizens and businesses rather than by central planning.

Product Innovation

The process of developing new products or significantly improving existing ones to meet consumer needs or open new markets.