If an Economy Were Experiencing a High Rate of Unemployment

question 84

Multiple Choice

If an economy were experiencing a high rate of unemployment as the result of insufficient aggregate demand, a Keynesian economist would favor:

• 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.

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Definitions:

Schedule M-1

A tax form used by corporations to reconcile income reported on the company's financial statements with the income reported on the tax return.

Book Income

The income or profit reported by a company in its financial statements before adjustments for taxes, as per accounting rules, different from taxable income.

Taxable Income

The amount of an individual’s or corporation's income used to determine how much tax is owed, calculated as gross income minus deductions and exemptions.

Fiscal Year-End

The fiscal year-end is the conclusion of a 12-month or 52-week period over which a company or organization measures its financial performance.