单选题
Are the following two statements about fiscal policy correct? Statement 1: The crowding out effect reduces the multiplier effect of expansionary fiscal policy but does not affect economic growth. Statement 2: A generational imbalance exists if the present value of government benefits to the current generation is not fully paid for by taxes on the current generation. Statement 1 Statement 2 ①A. Correct Correct ②B. Correct Incorrect ③C. Incorrect Correct
【正确答案】
C
【答案解析】Statement 1 is incorrect. By decreasing the available quantity of savings and increasing the real interest rate, fiscal crowding out results in less capital investment by private firms and therefore reduces potential GDP. Statement 2 is an accurate description of the generational effects of fiscal policy.