scould actually cause discretionary i policy to destabilize real GDP? (See page

Question

scould actually cause discretionary i policy to destabilize real GDP? (See page rat these time lags could actuall 1S 302.) Determi example ine whether each of the following is an le of a situation in which a direct expendi- ture offset to fiscal policy occurs. (See page 300.) In an effort to help rejuvenate the nation's rail- road system, a new government agency buys unused track, locomotives, and passenger and freight cars, many of which private companies would otherwise have purchased and put into 13-4. Determine ture offset to fiscal polic Oceureexendi- ture offset to fiscal policy occurs. (See page 300,) a. regular use. MyEconLab Visit http://www.myeconlab.com to comple

Explanation / Answer

13-4

A
Correct Answer:
It is the explame of direct expenditure offset to fiscal policy because government is spending to buy those assets that could have been purchased by private companies. It means that government is competing with private companies and substituting G (government expenditure) with C (consumption).

B.
Correct Answer:
It is not the example of direct expenditure offset to fiscal policy. Though, it is the example of indirect crowding out where an increase in interest rate happens and discouragement to planned spending by the private sector takes place.

C.
Correct Answer:
It is neither the example of direct expenditure not indirect crowding out. It is simply a part of fiscal policy as government is financing a construction of the museum as a part of art and cultural development program.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.