Questions: According to Keynes, the policy of incurring budget surpluses will cause the equilibrium price level to and equilibrium output to rise; rise rise; fall fall; rise fall; fall remain the same; remain the same

The answer is "fall; fall": According to Keynes, the policy of incurring budget surpluses will cause the equilibrium price level to fall and equilibrium output to fall.

Explanation:

1. Fall; Fall: Keynesian economics suggests that when a government incurs a budget surplus, it is effectively withdrawing money from the economy. This reduction in aggregate demand can lead to a decrease in both the equilibrium price level and equilibrium output. With less money circulating in the economy, consumer spending and investment may decrease, leading to lower demand for goods and services, which can cause prices and output to fall.

2. Rise; Rise: This option is incorrect because a budget surplus typically reduces aggregate demand, which would not lead to an increase in both price level and output.

3. Rise; Fall: This option is incorrect because a rise in the price level with a fall in output is more characteristic of stagflation, which is not directly related to Keynesian views on budget surpluses.

4. Fall; Rise: This option is incorrect because a fall in the price level with a rise in output would imply an increase in supply or productivity, not a result of a budget surplus.

5. Remain the same; Remain the same: This option is incorrect because a budget surplus is an active fiscal policy measure that typically affects aggregate demand, thus impacting both price levels and output.