Consider an Economy That Already Has a Sizable Budget Deficit

Multiple Choice

Consider an economy that already has a sizable budget deficit. If the economy is facing a major downturn, the government should:

A) stimulate the economy by raising expenditure as long as the ratio of debt to GDP is declining.
B) stimulate the economy by raising expenditure irrespective of the ratio of debt to GDP.
C) not stimulate the economy by raising expenditure because of the burden of debt.
D) not increase government expenditure, since the budget should be balanced.