Fiscal policy under the Reagan administration resulted in _____
A) higher budget deficits, which increased aggregate demand.
B) lower budget deficits, which decreased aggregate demand.
C) higher budget deficits, which decreased aggregate supply.
D) lower budget deficits, which stimulated aggregate supply.
E) increased government spending, which increased aggregate supply.

Question

Quizplus · Accepted Answer

Fiscal policy under the Reagan administration featured tax cuts and increased defense spending, which led to higher budget deficits. These deficits increased aggregate demand by injecting more money into the economy, as the government was borrowing to finance its spending.

Fiscal Policy Under the Reagan Administration Resulted in _____