The Crowding Out Effects of Fiscal Policy Are Smaller If

question 1

Multiple Choice

The crowding out effects of fiscal policy are smaller if:

• A) real GDP growth is above the economy's long-run potential rate.
• B) nominal wages and prices are flexible.
• C) the economy is in a recession caused by low aggregate demand.
• D) the spending multiplier is also smaller.

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Definitions:

Loss

A financial condition indicating that expenses have exceeded revenues over a certain period, leading to negative profit.

Disposal

Disposal involves getting rid of something, typically waste or assets no longer needed or useful for the business.

Goodwill

The value of all favorable attributes that relate to a company that is not attributable to any other specific asset.

Book Value

The net value of a company's assets minus its liabilities and intangible assets, often used to evaluate a company's worth.