Mainstream Economists Believe That Keynesian Economists Overstate the Effect of the Multiplier
Mainstream economists believe that Keynesian economists overstate the effect of the multiplier effect. Which of the following statements would mainstream economists NOT consider to be accurate?
A) A fiscals stimulus does not provide a 'free lunch' but does 'crowd out' private consumption expenditure and investment.
B) A fiscal stimulus is a vital tool to fight recession and depression due to the multiplier effect.
C) Effects of a fiscal stimulus are incapable of working fast enough to make a difference.
D) A fiscal stimulus results in bigger government, lower potential GDP, and slower real GDP growth.
E) Effects of a fiscal stimulus are small and short lived.
Correct Answer:
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