What is the relationship between fiscal multipliers and the "zero lower bound"?
A) Fiscal multipliers cannot fall below zero.
B) When monetary policy has hit the zero lower bound, fiscal multipliers are likely to be larger than normal.
C) At the zero lower bound, a fiscal contraction is actually expansionary.
D) At the zero lower bound, fiscal policy works by shifting the aggregate supply curve, rather than shifting the aggregate demand curve.
B
You might also like to view...
The study of a single firm and how it determines prices would fall under:
A) macroeconomics. B) microeconomics. C) the study of inflation. D) normative economics.
Which of the following determines the amount of money the banking system as a whole can create?
A) the limit on profits by banks imposed by the U.S. Congress B) the quantity of vault cash held by banks C) the gold reserves held by the Federal Reserve D) the quantity of bank reserves