## Answers

1 - Option C

A year or two atleast

The fiscal policy has the greater lags as compared to the monetary policy

2 - Option C

250 billion increase

Increase in govt. Purchase = 500/2

= $ 250 billion

Since the gap to be closed is negative , the increase will be needed and not decrease.

3 - Option D

It is greater than 1

For the multiplier to be effective , its value should be more than 1. The value of 1 will have no effect of multiplying.

4 - Option B

Crowding out policy

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