When there is excess aggregate demand,the appropriate fiscal policy would be for the government to
A)Make budget surpluses smaller.
B)Make budget surpluses larger.
C)Make budget deficits larger.
D)Increase the public debt.

Question

Quizplus · Accepted Answer

When there is excess aggregate demand, the appropriate fiscal policy would be to make budget surpluses larger. This can be achieved by either increasing taxes or decreasing government spending, both of which would help to cool down the economy by reducing the amount of money circulating in the economy.

When There Is Excess Aggregate Demand,the Appropriate Fiscal Policy Would