When a Prospering Economy Began to Show Signs of Hitting

question 46

Multiple Choice

When a prospering economy began to show signs of hitting a slump,President Eisenhower,despite diverse suggestions from all sides,held the tax rate stable and,in effect,did nothing.In hindsight,most economists of the 1990s agree that Eisenhower's strategy

• A) led to a long period of economic stagnation during the 1950s.
• B) was hopelessly naive; a tax increase would have been the right move.
• C) would have been enhanced by increased government spending and more attention to balancing the budget.
• D) represented a tragic return to the old, worn theories of classical economics.
• E) was right given the effects of automatic stabilizers on the economy.