If the government uses fiscal policy to close a recessionary gap,
A) government expenditure can be increased by less than the gap because of the government expenditure multiplier.
B) government expenditure must be increased by more than the gap because of the government expenditure multiplier.
C) taxes must be raised by more than the gap because of the tax multiplier.
D) taxes can be raised by less than the gap because of the tax multiplier.
E) taxes must be cut by more than the gap because of the tax multiplier.
Correct Answer:
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Q41: The figure above shows a nation's aggregate
Q42: Q43: Q44: If the economy is at an equilibrium Q45: The figure above shows a nation's aggregate Q47: In order to help the economy recover Q48: A fiscal stimulus works to close a Q49: Ignoring any supply-side effects, if government expenditure Q50: Which of the following is a limitation Q51: Unlock this Answer For Free Now! View this answer and more for free by performing one of the following actions Scan the QR code to install the App and get 2 free unlocks Unlock quizzes for free by uploading documents![]()
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