CFA Practice Question

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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
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