[Solved] Crowding Out Will Be Greater

Poorly timed discretionary policy can do more harm than good.Getting the timing right with fiscal policy is generally A)less difficult than with monetary policy. B)far less difficult than with monetary policy. C)more difficult than with monetary policy. D)about the same difficulty as with monetary policy. E)impossible due to the interference from the Bank of Canada.

It is ________ difficult to effectively time fiscal policy than monetary policy because ________. A)more; fiscal policy can be quickly decided and changed B)more; fiscal policy takes longer to implement C)less; monetary policy takes longer to decide and change D)less; monetary policy takes longer to implement

A(n)________ in private expenditures as a result of a(n)________ in government purchases is called crowding out. A)increase; decrease B)decrease; decrease C)decrease; increase D)increase; increase

If government spending and the price level increase, then A)the interest rate increases, consumption declines, and investment spending declines. B)the interest rate decreases, consumption declines, and investment spending declines. C)the interest rate increases, consumption increases, and investment spending increases. D)the interest rate decreases, consumption increases, and investment spending increases. E)the interest rate decreases, consumption increases, and investment spending declines.

Crowding out, following an increase in government spending, results from A)higher interest rates and a lower exchange rate. B)higher interest rates and a higher exchange rate. C)lower interest rates and a lower exchange rate. D)lower interest rates and a higher exchange rate.

If policy makers implement an expansionary fiscal policy but do not take into account the potential for crowding out, the new equilibrium level of GDP is likely to A)be at potential GDP. B)be above potential GDP. C)be below potential GDP. D)There is insufficient information given here to draw a conclusion.

Following a decrease in government spending, as the price level falls we would expect the level of interest rates to ________ and investment to ________. A)decrease; decrease B)decrease; increase C)increase; decrease D)increase; increase

An increase in government spending may expedite recovery from a recession in the short run, but in the long run, this policy may A)reduce investment in new capital. B)make domestic businesses less competitive in international markets as the dollar appreciates in value. C)raise interest rates and reduce consumer expenditures on automobiles and new houses. D)reduce future consumption spending due to higher tax rates in the future. E)All of the above are correct.

Increases in government spending result in ________ in the short run, and permanent increases in government spending result in ________ in the long run. A)partial crowding out; partial crowding out B)partial crowding out; complete crowding out C)complete crowding out; complete crowding out D)complete crowding out; partial crowding out E)no crowding out; complete crowding out

Alberta suffered large declines in employment throughout 2015 and 2016. If the federal and provincial governments increased spending at the same time, the most likely effect (of those below)would be A)an increase in people's incomes but declining health. B)a reduction in people's incomes and declining health. C)an increase in people's incomes and an improvement in their health. D)a reduction in peoples incomes and an improvement in their health. E)an increase in people's incomes and no change in their health.