When an Economy Is Operating Below Its Potential Capacity, Keynesian

question 222

Multiple Choice

When an economy is operating below its potential capacity, Keynesian economists argue that:

• A)taxes should be raised if the government is currently running a budget deficit.
• B)taxes should be lowered but only if the government is running a budget surplus.
• C)the government should cut taxes and\or increase spending in order to stimulate aggregate demand.
• D)all of these.