The economy is in a recession and the recessionary gap is large.A discretionary fiscal stimulation package that would avoid a budget deficit is a simultaneous and equal

Question

Quizplus · Accepted Answer

A discretionary fiscal stimulation package that avoids a budget deficit can be achieved by simultaneously increasing government expenditure and increasing taxes by equal amounts. This approach stimulates the economy through higher spending while offsetting the potential budget deficit with higher tax revenue.

The Economy Is in a Recession and the Recessionary Gap