Both the Crowding-Out Effect and New Classical Model Indicate That

question 28

Multiple Choice

Both the crowding-out effect and new classical model indicate that

• A) expansionary fiscal policy is a highly effective weapon with which to fight an economic downturn.
• B) restrictive fiscal policy is a highly effective weapon with which to control inflation caused by excess demand.
• C) there are side effects of budget deficits that will substantially, if not entirely, offset their expansionary impact on aggregate demand.
• D) fiscal policy can be used effectively to restrain inflation but it is largely ineffective as a weapon against recession.

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Definitions:

Inequality

A mathematical statement that indicates that two expressions are not equal, using symbols like <, >, ≤, or ≥.

Graphing Calculator

An electronic device capable of plotting graphs, solving simultaneous equations, and performing other tasks with variables.

Inequality

A mathematical statement that indicates the relationship of less than (<), greater than (>), less than or equal to (≤), or greater than or equal to (≥) between two expressions.

Critical Numbers

Values in the domain of a function where its derivative is zero or undefined, often marking potential maxima, minima, or inflection points.