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:

Negative Thoughts

Automatic, self-critical ideas that can contribute to feelings of anxiety, depression, and decreased motivation.

Cognitive-Behavioral

Relating to a psychological treatment approach that addresses maladaptive thinking patterns to change behavior and emotional state.

Psychodynamic

A theoretical perspective in psychology that emphasizes the role of the unconscious mind, inner forces, and childhood experiences in shaping behavior and personality.

Humanistic

A theory in psychology that emphasizes empathy and stresses the good in human behavior, aimed towards self-improvement and self-esteem.