- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 3. Fiscal Policy
- Subject 2. Roles and Objectives of Fiscal Policy
CFA Practice Question
Financing expansionary fiscal policy by increasing the deficit doesn't have any offsetting effects on the economy. True or False?
Correct Answer: False
The crowding-out effect suggests that budget deficits will exert less impact on aggregate demand than the basic Keynesian model implies.
User Contributed Comments 4
| User | Comment |
|---|---|
| yly13 | affects interest rate |
| Khadria | Ricardo-Barro effect |
| KarenMaciel | financing exp fiscal policy would result in an expansionary fiscal policy would result in an decrease in interest rates increasing deficit would result in an increase in interest rates spending more than revenue (increase deficit) and less amount available to private spending and thus increase in interest rates is inevitable Inc in interest rates and decrease of the same would offset each other Fantastic question!!!! |
| gill15 | Dos Equis effect |