According to the Keynesian view, the proper response to a severe recession would be
a. an increase in taxes in order to reduce the budget deficit.
b. an increase in government spending financed by borrowing.
c. a shift toward a restrictive monetary policy to reduce aggregate demand.
d. reliance on automatic stabilizers to direct the economy toward full employment.
B
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When a good gets better from one year to the next, the CPI has a what is called
A) commodity substitution bias. B) outlet substitution bias. C) magnitude of change bias. D) new goods bias. E) quality change bias.
The long-run Phillips curve shows the relationship between ________ and ________ when the economy is at full employment
A) the inflation rate; the nominal interest rate B) the unemployment rate; real GDP C) potential GDP; the natural unemployment rate D) the inflation rate; the unemployment rate E) the natural inflation rate; the unemployment rate