A. If there is complete crowding out as a result of an increase in government spending there will be

a decrease in aggregate demand.

no change in aggregate demand.

an increase in aggregate demand.

a downward movement along the aggregate demand curve.

B. According to Buchanan and Wagner, why is there a political bias toward expansionary fiscal policy rather than contractionary fiscal policy?

In a democracy, expansionary fiscal policy prescriptions are more politically popular than are the policy prescriptions associated with contractionary fiscal policy.

In a democracy, contractionary fiscal policy prescriptions are more policitally popular than are the policy prescriptions associated with expansionary fiscal policy.

They assert that empirical evidence has shown that Keynesian fiscal policy prescriptions have been successful at closing recessionary gaps, but not inflationary gaps.

 

They assert that empirical evidence has shown that Keynesian fiscal policy prescriptions have been successful at closing inflationary gaps, but not recessioinary gaps.

 

none of the above

C. Fiscal policy is

the money supply policy that the Fed pursues to achieve particular economic goals.

the spending and tax policy that the government pursues to achieve particular macroeconomic goals.

the investment policy that businesses pursue to achieve particular macroeconomic goals.

the spending and saving policy that consumers pursue to achieve particular macroeconomic goals.

none of the above

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