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Business, 15.04.2020 23:42 camila9022

Let's say that the economy currently has an unemployment rate of 9.4% and that economists have observed that the budget deficit during the past several months has increased significantly. Based on this, which of the following would a supporter of the Classical economic theory recommend?

a. Aggregate supply must increase. The government must do this by lowering taxes and encouraging saving.
b. Aggregate demand must decrease. The government must do this by lowering taxes
c. Aggregate demand must increase. The government must do this by increasing spending
d. Aggregate supply must decrease. The government must do this by raising taxes and discouraging saving.
e. Both aggregate demand and aggregate supply must increase. The government must do this by increasing government spending and limiting the money supply

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