If Policymakers Implement an Expansionary Fiscal Policy but Do Not

question 201

Multiple Choice

If policymakers implement an expansionary fiscal policy but do not take into account the potential for crowding out,the new equilibrium level of GDP is likely to

• A)be at potential GDP.
• B)be above potential GDP.
• C)be below potential GDP.
• D)There is insufficient information given here to draw a conclusion.