All of the following are classical objections to the use of expansionary fiscal policy during a recession, EXCEPT O Cansical economists emphasize the importance of supply shocks in explaining the business cycle. Expansionary fiscal policy during recessions caused by supply shocks cannot stop a recession and only cause additional inflation O Casical economists are more lely to believe that the fiscal multiplier is greater than one, implying that expansionary fiscal policy has a poor rate of return in terms of generating short-run real GDP growth O The economy is quick to adjust during recessions, making expansionary fiscal policy unnecessary and possibly destabilizing O Espamionary fscal policy increases government debt, causes inflation, crowds out private investment, and will likely require taxes to increase at some point.

All of the following are classical objections to the use of expansionary fiscal policy during a recession, EXCEPT O Cansical economists emphasize the importance of supply shocks in explaining the business cycle. Expansionary fiscal policy during recessions caused by supply shocks cannot stop a recession and only cause additional inflation O Casical economists are more lely to believe that the fiscal multiplier is greater than one, implying that expansionary fiscal policy has a poor rate of return in terms of generating short-run real GDP growth O The economy is quick to adjust during recessions, making expansionary fiscal policy unnecessary and possibly destabilizing O Espamionary fscal policy increases government debt, causes inflation, crowds out private investment, and will likely require taxes to increase at some point.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 5P

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Similar questions

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