To compensate for the possibility of indirect crowding out, a government engaging in expansionary policy aimed at eliminating a recessionary gap could
A) reduce taxes rather than increase government spending.
B) increase spending less than the simplest Keynesian model would predict.
C) both reduce taxes and reduce spending to be able to achieve full employment.
D) increase spending more than the simplest Keynesian model would predict.
Question 2
The two ways in which deficit spending can impose a burden on future generations are
A) by requiring future generations to face lower government spending and to utilize a smaller stock of human capital.
B) by requiring future generations to face higher taxes and to work with a lower accumulated stock of capital goods.
C) by substituting private goods for public goods and thereby benefiting only large businesses.
D) by substituting private goods for public goods and thereby shifting resources to foreign residents.
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