Japan's Increase in Government Spending Financed by Borrowing in Response
Japan's increase in government spending financed by borrowing in response to the economic downturn and sluggish growth of the 1990s is most consistent with
A)the Keynesian view of appropriate fiscal policy.
B)the supply-side view of appropriate fiscal policy.
C)the crowding-out theory of fiscal policy.
D)the view that the government should maintain a balanced budget.
Which of the following is indicative of Japan's expansionary fiscal policy during the 1990s?
A)a shift from budget deficits to budget surpluses during the 1990s
B)a decrease in government spending as a share of GDP during the 1990s
C)an increase in tax rates during the 1990s
D)a shift from budget surpluses to budget deficits during the 1990s
What is the relationship between monetary policy and interest rates?
A)Expansionary monetary policy will always result in an increase in interest rates.
B)Restrictive monetary policy will tend to push interest rates up,unless people expect deflation to occur,in which case interest rates will decline to low levels.
C)Expansionary monetary policy will tend to push interest rates up,unless people expect inflation to occur,in which case interest rates will remain low.
D)Restrictive monetary policy will always result in a decrease in interest rates.
Which of the following is a similarity between Japan's response to the recession of the 1990s and the U.S.response to the Great Depression?
A)Both countries reduced government spending as a percentage of GDP significantly in response to the recessions.
B)Both countries were able to utilize fiscal policy to significantly reduce unemployment during the recessions.
C)Both countries followed a restrictive monetary policy during the recessions.
D)Both countries tried to stimulate real output and aggregate demand by shifting to a more expansionary monetary policy.