According to the active policy position, eliminating a contractionary gap
A)can only be achieved by decreasing wages
B)requires a public policy of wage and price controls
C)should be accomplished by stimulating aggregate demand
D)will increase unemployment
E)will cause a recession

Question

Quizplus · Accepted Answer

According to the active policy position, eliminating a contractionary gap should be accomplished by stimulating aggregate demand. This can be done through expansionary fiscal or monetary policies, such as increasing government spending or lowering interest rates, which will increase consumer and business spending and lead to economic growth. Decreasing wages or implementing wage and price controls are not effective solutions to eliminate a contractionary gap, as they can have negative economic consequences and may not address the underlying issue. Additionally, eliminating a contractionary gap should not increase unemployment or cause a recession, as the goal is to promote economic growth and stabilize the economy.

According to the Active Policy Position, Eliminating a Contractionary Gap