To Compensate for the Possibility of Indirect Crowding Out, a Government

question 101

Multiple Choice

To compensate for the possibility of indirect crowding out, a government engaging in expansionary policy aimed at eliminating a recessionary gap could

• A)increase spending less than the simplest Keynesian model would predict.
• B)increase spending more than the simplest Keynesian model would predict.
• C)reduce taxes rather than increase government spending.
• D)both reduce taxes and reduce spending to be able to achieve full employment.

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