If an Economy Were Experiencing a High Rate of Unemployment

question 23

Multiple Choice

If an economy were experiencing a high rate of unemployment as the result of weak aggregate demand, a Keynesian economist would be most likely to recommend

• A) a reduction in taxes coupled with a reduction in government expenditures of equal size.
• B) an increase in government expenditures coupled with an increase in taxes of equal size.
• C) a reduction in taxes, without any offsetting reduction in government expenditures.
• D) maintenance of a balanced budget.