Question

Question 91 pts

Crowding out

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.

Answer 1

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