To close a recessionary gap, Keynesian theory calls for
A)expansionary fiscal policy.
B)contractionary fiscal policy.
C)international trade.
D)none of these.

Question

Quizplus · Accepted Answer

Keynesian theory suggests that during a recession, the government should increase its spending and reduce taxes to stimulate demand and encourage economic growth, which is known as expansionary fiscal policy. This can help close a recessionary gap and bring the economy back to full employment.

To Close a Recessionary Gap, Keynesian Theory Calls for