Economists who are in favor of smaller government tend to prefer ________________ when expansionary _______________ policy is needed to raise aggregate demand.

Question

Quizplus · Accepted Answer

Economists who prefer smaller government believe that less government intervention in the economy is the key to achieving economic growth and stability. Therefore, they would choose tax cuts as a way to stimulate aggregate demand because it involves less government spending and relies on market forces to boost economic activity. Fiscal policy involves government spending and taxation, so choosing tax cuts rather than more government spending aligns with their preference for smaller government. Monetary policy involves changing the money supply and interest rates, which is separate from government spending, but tax cuts would still be the preferred option for economists who favor smaller government.

Economists Who Are in Favor of Smaller Government Tend to Prefer