Which of the following can eliminate a recessionary GDP gap,ceteris paribus?
A)An increase in consumption expenditure.
B)A decrease in investment.
C)An increase in saving.
D)A decrease in government spending.

Question

Quizplus · Accepted Answer

An increase in consumption expenditure would increase aggregate demand, which would lead to an increase in output and potentially eliminate a recessionary GDP gap. Decreases in investment and government spending, as well as increases in saving, would all decrease aggregate demand and make it less likely to eliminate a recessionary GDP gap.

Which of the Following Can Eliminate a Recessionary GDP Gap,ceteris