If the government ran a major budget deficit, and there was no noticeable effect on the level of GDP, this could be taken as evidence of
A) Laffer curve effect.
B) structural deficit.
C) crowding-out.
D) monetary policy ineffectiveness.

Question

Quizplus · Accepted Answer

A major budget deficit with no effect on GDP suggests that increased government borrowing might be offset by reduced private investment, a phenomenon known as crowding-out.

If the Government Ran a Major Budget Deficit, and There