If an Economy Were Experiencing a High Rate of Unemployment

question 43

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

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