Danny Morrison

Advanced Placement (AP)

21 February, 06:22

The economy is in a recession. A congresswoman suggests increasing spending to stimulate aggregate demand but also at the same time raising taxes to pay for the increased spending. Her suggestion to combine higher government expenditures with higher taxes is:

a. The worst possible combination of tax and expenditure changes.

b. The best possible combination of tax and expenditure changes.

c. A mediocre and contradictory combination of tax and expenditure changes.

d. None of the above.