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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