Use the figure below to answer the following question(s). Figure 12-2
Refer to Figure 12-2. Which of the following will most likely be favored by a new classical economist if the economy is operating at point a?
A) a tax increase to balance the budget
B) restrictive fiscal policy
C) expansionary fiscal policy
D) continuation of the current tax and expenditure policies (dependence on the economy's self-correcting mechanism to restore full employment)

Question

Use the figure below to answer the following question(s). Figure 12-2
 Refer to Figure 12-2. Which of the following will most likely be favored by a new classical economist if the economy is operating at point a?
A) a tax increase to balance the budget 
B) restrictive fiscal policy 
C) expansionary fiscal policy 
D) continuation of the current tax and expenditure policies (dependence on the economy's self-correcting mechanism to restore full employment)

Quizplus · Accepted Answer

A new classical economist would believe in the self-correcting mechanism of the economy and would advocate for the continuation of current tax and expenditure policies without government intervention. Therefore, option D is the most appropriate choice.

Use the Figure Below to Answer the Following Question(s)