According to John Maynard Keynes, policy makers should respond to a downturn in the business cycle by:
A. Cutting taxes and increasing government spending.
B. Cutting taxes and reducing government spending.
C. Raising taxes and increasing government spending
D. Raising taxes and reducing government spending
E. Do nothing because government activism violates Keynes' laissez faire approach.
Ans: A. Cutting taxes and increasing government spending.
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The reversal of fortune in terms of population density suggests that:
A) areas with a higher population density in 1500 are today relatively less prosperous. B) areas with a higher population density in 1900 are today relatively less prosperous. C) areas with a higher population density in 1900 are today relatively more prosperous. D) areas with a higher population density in 1500 are today relatively more prosperous.
An increase in technology ________ potential GDP and ________ aggregate supply
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases E) does not change; does not change