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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Definitions:

Supply And Demand

A fundamental economic concept that describes the relationship between the quantity of a commodity available and the quantity of that commodity people are willing to buy at certain price levels.

Marketing

The business process of identifying, anticipating, and satisfying customers' needs and wants through creating, offering, and exchanging products of value.

Operations

The day-to-day activities involved in running a business, especially those related to production and delivery of goods and services.

Seasonal Demand

The fluctuation in consumer demand for particular products or services at different times of the year, influenced by seasons and holidays.