Consider the following events: Event 1: Growth in the world economy slows.Event 2: The world price of oil rises.
Event 3: Canadian labour productivity declines.Choose the statement that is correct.
A)A classical macroeconomist and a monetarist recommend that taxes be kept low to avoid disincentive effects for all of the events and a Keynesian recommends active fiscal policy and monetary policy to offset all events.
B)A Keynesian recommends active fiscal policy but not monetary policy for events 1 and 2 and monetary policy but not fiscal policy for event 3.
C)All macroeconomists believe that the economy requires active fiscal policy and monetary policy to keep the economy out of recession.
D)A Keynesian recommends no action for all of the events.
E)A classical macroeconomist and a monetarist recommend an increase in the quantity of money for all events.

Question

Quizplus · Accepted Answer

Classical macroeconomists and monetarists generally advocate for low taxes to avoid disincentive effects on work and investment, consistent across various economic challenges. Keynesians typically support the use of active fiscal and monetary policies to counteract economic downturns, making choice A correct.

Consider the Following Events: Event 1: Growth in the World