An Expansionary Fiscal Policy That Takes the Form of an Increase

Multiple Choice

An expansionary fiscal policy that takes the form of an increase in government purchases carries the possibility that private investment _ and, as a result, the future growth rate of .

A) is crowded out; potential output is reduced
B) increases; aggregate demand increases
C) is crowded out; corporate tax revenue is reduced
D) rises to an unsustainable level; real GDP is reduced
E) increases; net exports increases