When the Self-Correcting Mechanism of the ADI-IA Model Is Particularly

Multiple Choice

When the self-correcting mechanism of the ADI-IA model is particularly slow,the case for active fiscal policy is considerably strengthened when

A) the overnight target rate is at its effective upper bound.
B) the overnight target rate is at its effective lower bound.
C) government deficits are roughly equal to 50 percent of real GDP.
D) government spending exceeds government revenues.
E) recessionary or inflationary gaps are relatively small.