1. what problem did the great depression in the 1930's highlight that classical economics did not address? a. how often such an event would happen worldwide b. how much the government should spend to revive the economy c. how long the market would take to return to equilibrium d. how many people would lose their jobs or homes 2. what is the maximum output that the economy can sustain over a period of time called? a. productive capacity b. economic output c. controlled incentive d. maximum spending 3. what are the two main economic problems that keynesian economics seeks to address? a. business and personal taxes b. military and other defense spending c. periods of depression and inflation d. foreign aid and domestic spending 4. when the gov. collects taxes and pays out transfer payments as a way to balance the economy. what are these fiscal tools called? a. federal payments to states b. automatic stabilizers c. internal revenue service aids d. income equalizers 5. what does experience show about the relationship of taxation and work? a. when taxes are cut, workers work significantly more hours b. when taxes are raised, workers work significantly more hours c. a tax cut does not cause employers to raise wages significantly d. a tax cut does not cause workers to work significally more hours