Conventional fiscal policy was limited during the 2008-2009 financial crisis because of:
A) concerns about increasing the government's budget deficit and debt.
B) difficulties paying out tax rebates.
C) the inability of the government to reduce spending below zero.
D) the inability of the government to raise taxes above 100 percent of income.

Question

Quizplus · Accepted Answer

During the financial crisis of 2008-2009, conventional fiscal policy was limited because of concerns about increasing the government's budget deficit and debt. This limited the government's ability to use fiscal policy tools, like increasing government spending or cutting taxes, to stimulate the economy.

Conventional Fiscal Policy Was Limited During the 2008-2009 Financial Crisis