Inflation distorts the operation of our tax and financial system.

The consumption function shows the relationship between

A) interest rates and planned real consumption. B) employment and planned real consumption. C) the price level and planned real consumption. D) real disposable income and planned real consumption.

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.