Test: AP Macroeconomics

1.

If the economy is in severe recession, which of the following fiscal policies would a Keynesian economist most likely recommend?

An increase in personal income taxes in order to help balance the budget.

A decrease in government spending in order to offset the decrease in tax revenues that result from an economy in recession.

An increase in government spending on public infrastructure, even if this spending results in greater budget deficits.

A decrease in government transfer payments.

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