1. Business
  2. Economics
  3. suppose the negative shock of the pandemic has pushed the...

Question: suppose the negative shock of the pandemic has pushed the...

Question details

Suppose, the negative shock of the pandemic has pushed the economy far below its productive capacity (or potential GDP). To boost the economy, the government has decided to expand government spending (G). Government should exercise caution in implementing this policy as increase in government spending may ‘crowd out’ private spending. Is this True/False/Uncertain and why?

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution