Many Economists Who Would Normally Argue Against Government Spending Increases

question 275

Multiple Choice

Many economists who would normally argue against government spending increases due to "crowding out" were in favour of the large economic stimulus announced in 2009.Why would these economists change their mind?

• A)Research had shown that crowding out does not occur.
• B)Crowding out only occurs when the economy is overheating.
• C)Crowding out only occurs when the federal government is running a budgetary surplus.
• D)Crowding out is less likely during recessions due to low interest rates and falling prices.
• E)Crowding out is more likely during a recession due to a lack of investment opportunities.

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Definitions:

Smooth Muscle

A type of muscle found in the walls of hollow organs like the intestines and blood vessels, controlled involuntarily.

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Having more than one nucleus within a single cell, a characteristic seen in certain types of muscle cells and some other organisms.

Spindle-Shaped

A term describing cells or muscle fibers that are tapered at both ends, resembling a spindle.

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