Which of the following actions could be undertaken if the government wants to close a recessionary gap?
A) Increase taxes and reduce government spending.
B) Reduce taxes and increase government spending.
C) Increase taxes and increase government spending.
D) Reduce taxes and reduce government spending.
B
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An increase in the supply (curve) of a good implies a larger quantity of the good will now be supplied
A) at the same price. B) even if the price falls substantially. C) only if the price rises. D) whenever the demand decreases.
If the tax multiplier is -1.5 and a $200 billion tax increase is implemented, what is the change in GDP, holding everything else constant? (Assume the price level stays constant.)
A) a $300 billion decrease in GDP B) a $30 billion increase in GDP C) a $300 billion increase in GDP D) a $133.33 billion increase in GDP E) a $133.33 billion decrease in GDP