According to Keynes' philosophy of government budgets,_____.

A) chronic deficits accumulate into a national debt
B) permanent surpluses are desirable
C) fiscal policy focuses on maintaining an annually balanced budget
D) deficits dampen aggregate demand in the short run and reduce the federal debt
E) deficits are appropriate during recessions

Fiscal Policy

Policies implemented by the government that involve taxation and expenditure to affect economic activities.

Chronic Deficits

entail persistent and extended periods where expenses exceed revenue, leading to sustained budget shortfalls.

Aggregate Demand

Aggregate demand represents the total demand for goods and services in an economy at a given overall price level and in a given time period.