Suppose that worried about a recession, the government of theUnited States is th

Question

Suppose that worried about a recession, the government of theUnited States is thinking about increasing government spending ongoods and services to stimulate the economy. .3.   What would Keynesian macroeconomistssay about expansionary fiscal policy? A.   Fiscal policy has no effect onaggregate output and unemployment in the short run and longrun. B.   Fiscal policy can increase aggregateoutput and decrease unemployment while lowering the aggregate pricelevel. C.   Fiscal policy is the best policy tobring the economy out of a recession. D.   Fiscal policy might be useful, butmonetary policy should be considered first.

Explanation / Answer

D.   Fiscal policy might be useful, but monetary policy shouldbe considered first.

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