The Japanese economy is stuck in a recessionary gap.The proper fiscal policy could include a(n)
A)decrease in taxes.
B)increase in government purchases.
C)increase in transfer payments.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

All of the options (decrease in taxes, increase in government purchases, and increase in transfer payments) are forms of expansionary fiscal policy, which can help to close a recessionary gap by stimulating aggregate demand.

The Japanese Economy Is Stuck in a Recessionary Gap