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In 2009, Output Was Beneath Potential

Question 32

Multiple Choice

In 2009, output was beneath potential. At the same time, the budget deficit hit a record high of over $1 trillion. If President Obama were to have pursued budget cuts, given the state of the economy, these spending cuts would have:


A) been procyclical.
B) been countercyclical.
C) increased interest rates.
D) crowded out investment.

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