Which of the following options could be used to eliminate a recessionary gap?
A) Decrease consumption
B) Increase investment
C) Decrease investment
D) Increase taxes

Question

Which of the following options could be used to eliminate a recessionary gap?
A) Decrease consumption
B) ​Increase investment
C) ​Decrease investment
D) ​Increase taxes

Quizplus · Accepted Answer

To eliminate a recessionary gap, increasing investment is the best option because it directly increases aggregate demand and can lead to increased production and employment. Decreasing consumption or investment or increasing taxes would only further decrease aggregate demand and worsen the recessionary gap.

Which of the Following Options Could Be Used to Eliminate