Question 91 pts
|refers to how expansionary monetary policy causes problems by reducing private savings.|
|refers to how government debt endangers the Social Security system.|
|refers to how expansionary fiscal policy reduces private spending.|
|refers to how excessive government taxes cause the Phillips curve.|
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Question 101 pts
The classical school
|was the dominant school of economic thought until the Great Depression.|
|was the dominant school of economic thought after the Great Depression.|
|believed that the economy was basically unstable.|
|believed wages and prices were rigid downwards.|
1) Crowding out
Solution: refers to how expansionary fiscal policy reduces private spending.
Explanation: The crowding-out effect refers how an expansionary fiscal policy will tend to decrease the private purchases of interest-sensitive goods.
2) The classical school
Solution: was the dominant school of economic thought until the Great Depression
Explanation: The classical school of economic thought dominated macroeconomic thinking until the Great Depression
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