Which of the following is an example of a fiscal policy designed to counter a recessionary gap?
A)decreasing government expenditures on goods and services
B)increasing debt interest payments
C)decreasing transfer payments
D)increasing taxes
E)increasing transfer payments

Question

Quizplus · Accepted Answer

Increasing transfer payments is an example of expansionary fiscal policy, which involves increasing government spending and/or decreasing taxes to stimulate economic growth and reduce a recessionary gap. Transfer payments, such as unemployment benefits and welfare, provide direct support to individuals and can help stimulate spending and aggregate demand.

Which of the Following Is an Example of a Fiscal