One Potential Problem with Using Fiscal Policy to Close Recessionary

question 72

Multiple Choice

One potential problem with using fiscal policy to close recessionary output gaps is that:

• A)sustained government deficits can be harmful to long-run economic growth.
• B)decreased government spending can cause inflationary pressure to build.
• C)reductions in interest rates can reduce savings and, therefore, investment.
• D)it may be offset by automatic stabilizers.

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Definitions:

Leukemia

A category of cancer involving the blood and bone marrow, distinguished by the surplus production of abnormal white blood cells.

Integumentary

Pertaining to the skin and its accessories, functioning primarily for protection, sensation, and regulation of temperature.

Hemorrhagic Stroke

A type of stroke that occurs when a blood vessel in the brain bursts, leading to bleeding within the surrounding tissues and damage to brain cells.

Blood Vessel

Any of the tubular structures carrying blood through the circulatory system, including arteries, veins, and capillaries.