When an Economy Is Operating Below Its Potential Capacity, Keynesian

Multiple Choice

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 expenditures in order to stimulate aggregate demand.
D) both a and b are correct.
E) all of the above are correct.