1.Label each of the following statements as most likely to be made by a Keynesian (K), believer in the crowding out view (CO), a new classical economist (NC), or a supply sider (SS).(8mks)

a.Expansions in government spending financed by borrowing (debt) are a highly effective way to increase aggregate demand in the economy. ____

b.Large budget deficits cause high real interest rates that reduce private spending and investments._____

c.There is no link between budget deficits and interest rates, higher deficits are simply matched by higher savings. ______

d.The expansionary effect of increased government spending will be completely offset by reductions in private consumption; thus, fiscal policy has no effect on aggregate demand. _____

e.The expansionary effect of increased government spending financed with debt will at least be partially offset by the negative effects of higher interest rates caused by government borrowing. _____

f.Lower marginal tax rates stimulate people to work, save, and invest, resulting in more output and a larger tax base. ____

g.The primary use of fiscal policy should not be to counter short-run business cycle fluctuations but rather to promote long-run growth in the economy.

h.Whenever the economy is in recession, expansionary fiscal policy should be employed to restore full employment.