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When an Economy Is Operating Below Its Potential Capacity, Keynesian

Question 222

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 spending in order to stimulate aggregate demand.
D) all of these.

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