Use the Figure Below to Answer the Following Question(s)

question 40

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 12-3

-Refer to Figure 12-3.If an economy is currently operating at Y₁,which of the following would a new classical economist be most likely to favor?

• A)higher taxes and reductions in expenditures in order to shift the budget toward a surplus
• B)lower taxes and increase in expenditures in order to shift the budget toward a deficit
• C)a balanced budget
• D)no government action and reliance on the self-corrective mechanism