The Expansionary Effects of an Increase in Government Expenditures Will

Multiple Choice

The expansionary effects of an increase in government expenditures will tend to be offset, at least partially, if

A) government borrowing drives interest rates upward.
B) taxes are not also increased.
C) business decision makers and consumers become more optimistic as the result of the fiscal stimulus.
D) the economy is operating well below its full-employment capacity.