Consider an economy that already has a sizable budget deficit. If the economy is facing a major downturn, the government should: A. stimulate the economy by raising expenditure as long as the ratio of debt to GDP is declining. O B. stimulate the economy by raising expenditure irrespective of the ratio of debt to GDP. O C. not stimulate the economy by raising expenditure because of the burden of debt. O D. not increase government expenditure, since the budget should be balanced.Aggregate price level LRAS SRAS P1 . . .. E1 AD Y1 Yp Real GDP `potential output Refer to Figure: Short- and Long-Run Equilibrium. If the economy is at equilibrium at E1, the appropriate policy to return the economy to potential output is a(n): A. increase in transfer payments. O B. decrease in transfer payments. O C. increase in taxes. O D. decrease in government spending