Which of the Following Was a Justification for Breaking with the Normal

question 158

Multiple Choice

Which of the following was a justification for breaking with the normal presumption against using discretionary fiscal policy during the Great Recession?

• A)Monetary policy would not be effective because interest rates were so high.
• B)Crowding-out was not likely to be a problem in a very depressed economy with interest rates near zero.
• C)The economy was so depressed that a political business cycle was not likely to be a problem.
• D)Ricardian equivalence was likely if monetary policy was used alone.

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