Asked by macie hutchinson on May 10, 2024

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Discretionary expansionary fiscal policy may not lead to _____.

A) decreased national saving
B) decreased unemployment
C) inflation
D) lower interest rates
E) crowding out

Discretionary Expansionary

Refers to fiscal or monetary policy actions initiated by a government or central bank to stimulate economic growth.

National Saving

The total amount of savings generated within a country, equal to the sum of private and public savings, often used for investment.

Crowding Out

The phenomenon where increased government spending leads to a reduction in private sector investment or spending due to higher interest rates or competition for resources.

  • Digest the theories of crowding in and crowding out in the context of fiscal policy's relationship with private investment.
  • Acknowledge the impact fiscal policies exert on national savings, interest rates, and investment.
  • Absorb knowledge about the role of discretionary fiscal policy in shaping economic outcomes.
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ZK
Zybrea KnightMay 16, 2024
Final Answer :
D
Explanation :
Discretionary expansionary fiscal policy, which involves increasing government spending or decreasing taxes to stimulate the economy, typically leads to higher interest rates, not lower. This is because increased government borrowing can drive up demand for loanable funds, raising the cost of borrowing.