After the 2008 Financial Crisis, Proponents of Austerity Argued That

Multiple Choice

After the 2008 financial crisis, proponents of austerity argued that it was the appropriate policy because:

A) cuts in government spending would increase the interest rates that savers could earn and would therefore increase the supply of loanable funds.
B) cuts in government spending would keep interest rates on government debt low and improve investor confidence.
C) fiscal stimulus would likely cause deflation.
D) the lag associated with fiscal stimulus was too long.