Suppose the government wants to maintain a balanced budget. To ...

[Evvie72]

Suppose the government wants to maintain a balanced budget. To achieve this goal, when the economy falls into recession government would need to ________ taxes, which would cause aggregate demand to ________.
 
  A) decrease; decrease B) increase; increase C) increase; decrease D) decrease; increase

Question 2

Ceteris paribus, an increase in the government budget deficit increases interest rates in the United States and causes a real appreciation of the dollar.
 
  Indicate whether the statement is true or false

[rleezy04]

Answer to Question 1

C

Answer to Question 2

FALSE