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