Which Argument Was a Justification for Breaking with the Normal

question 255

Multiple Choice

Which argument 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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Definitions:

Motivated Forgetting

A psychological theory suggesting individuals may unconsciously forget memories that cause stress or anxiety.

Semantic Memory

A type of long-term memory that involves the recall of general facts, meanings, concepts, and knowledge about the external world.

Explicit Memory

A type of long-term memory related to consciously recalling facts and experiences.

Implicit Memory

A type of long-term memory that does not require conscious thought to retrieve, often involving skills and routine procedures that are performed automatically.