Multiple Choice
According to the Classical advocates of sound finance, if an economy is in a recession, the government should run:
A) a budget deficit and increase spending, which will increase output.
B) a budget surplus and decrease spending, which will increase output.
C) neither a surplus nor a deficit since changes in deficit spending do not affect output.
D) neither a surplus nor a deficit since changes in spending affect output.
Correct Answer:

Verified
Correct Answer:
Verified
Q32: In 2009, output was beneath potential. At
Q33: Refer to the graph shown. Assume the
Q34: If a fiscal expansion financed by government
Q35: Automatic stabilizers cause:<br>A)deeper recessions and more rapid
Q36: Because reducing both unemployment and inflation simultaneously
Q38: When interest rates go up, it is:<br>A)more
Q39: What is the difference between demand side
Q40: Which of the following is an automatic
Q41: The provisions in state constitutions requiring them
Q42: Unemployment compensation is:<br>A)an automatic stabilizer because it