b. The larger the crowding out effect, the smaller the actual effect of a given change in fiscal policy.
c. The crowding out effect does not occur with a tax change.
d. Starting from an initial recession equilibrium, expansionary fiscal policy could potentially increase employment to the full employment level.
c. The crowding out effect does not occur with a tax change.
d. Starting from an initial recession equilibrium, expansionary fiscal policy could potentially increase employment to the full employment level.
ANSWER:
c. The crowding out effect does not occur with a tax change.