If Smith believes the economy is self-regulating,then Smith
A) is less likely to advocate expansionary fiscal policy when the economy is in a recessionary gap than Jones,who believes the economy is not self-regulating.
B) is more likely to advocate expansionary fiscal policy when the economy is in a recessionary gap than Jones,who believes the economy is not self-regulating.
C) will believe that there is zero crowding out,too.
D) will believe that wages are inflexible downward,too.
E) b and d

Question

Quizplus · Accepted Answer

If Smith believes the economy is self-regulating, he would not advocate for expansionary fiscal policy during a recessionary gap because he believes the economy will naturally correct itself without intervention. This is in contrast to Jones, who does not believe the economy is self-regulating and would therefore advocate for government intervention. There is no reason to believe that Smith would necessarily believe in zero crowding out or inflexible downward wages, so options C and D can be eliminated. Option E is also incorrect because it includes options that are not necessarily true based on Smith's belief in self-regulation.

If Smith Believes the Economy Is Self-Regulating,then Smith