The Japanese Experience of the 1990s Indicates That Increases in Government

question 44

Multiple Choice

The Japanese experience of the 1990s indicates that increases in government spending financed through borrowing will generate

• A)an increase in aggregate demand and real output,just as the Keynesian model predicts.
• B)secondary effects that retard private sector spending and thereby reduce the expansionary impact of fiscal policy.
• C)a recovery of stock market and asset prices within 12 to 18 months.
• D)a decrease in tax rates but an increase in tax revenues,just as the supply-side model predicts.

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Definitions:

Evil Motive

The intention to cause harm or perform actions for malicious reasons, often underlying criminal or unethical behavior.

Punitive Damages

Monetary compensation awarded in a lawsuit that goes beyond what is necessary to compensate the plaintiff and is intended to punish the defendant for egregious behavior and deter similar conduct in the future.

Constitution

The foundational legal document that establishes the framework of a government, outlining the structure, powers, and limitations of government institutions.

Grossly Excessive

Describes an amount or action that is much more than what is reasonable or appropriate.