One potential problem with using fiscal policy to close recessionary output gaps is that:
A. sustained government deficits can be harmful to long-run economic growth.
B. it may be offset by automatic stabilizers.
C. decreased government spending can cause inflationary pressure to build.
D. reductions in interest rates can reduce savings and, therefore, investment.
Answer: A
Economics
You might also like to view...
In states where the government runs liquor stores, the monopoly results from
A) economies of scale. B) legal restrictions. C) control of an essential resource. D) patents. E) public fear.
Economics
Tax incidence is the actual division of the
A) tax revenues between the federal government and state governments. B) population into different tax brackets. C) burden of the tax between buyers and sellers in a market. D) tax revenues between government agencies.
Economics