Use the figure below to answer the following question(s) .
Figure 12-3 
-Refer to Figure 12-3. If an economy is currently operating at Y1, which of the following would a new classical economist be most likely to favor?
A) higher taxes and reductions in expenditures in order to shift the budget toward a surplus
B) lower taxes and increase in expenditures in order to shift the budget toward a deficit
C) a balanced budget
D) no government action and reliance on the self-corrective mechanism
Correct Answer:
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