The theory that budget deficits are a short-term concern that may be addressed in more prosperous economic years is the theory of:
A)Keynesian economics
B)Laissez faire economics
C)Crucial demand theory
D)Subsistence manipulation
E)Supply-side economics

Question

Quizplus · Accepted Answer

The theory that budget deficits are a short-term concern that may be addressed in more prosperous economic years is the theory of Keynesian economics. Keynesian economic theory teaches that in order to stimulate the economy in bad years, you run a budget deficit by cutting taxes and increasing government spending. Then, when the economy recovers, you raise taxes and cut government spending to balance out the budget. Most economists believe that this system can work in theory, but it is hard to implement in practice because citizens won't vote for politicians who promise to raise taxes and cut spending in good economic years.

The Theory That Budget Deficits Are a Short-Term Concern That