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:

Accounts Payable

Amounts owed by a business to its suppliers or vendors for goods and services received but not yet paid for.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services delivered but not yet paid for.

Account Balances

The amounts of money held in financial accounts at a specific point in time, reflecting the net result of all completed transactions.

Adjusted Trial Balance

A list of all accounts and their balances after making adjustments, used for preparing financial statements.