Two economies are identical, and both are in a recessionary gap. In one economy, the government increases spending to close the gap, and in the other, the government decreases an equivalent amount of income taxes to close the gap. In which economy will the gap close by a greater amount? Justify your answer.

Question

Quizplus · Accepted Answer

The Answer of Two economies are identical, and both are in a recessionary gap. In one economy, the government increases spending to close the gap, and in the other, the government decreases an equivalent amount of income taxes to close the gap. In which economy will the gap close by a greater amount? Justify your answer.

Two Economies Are Identical, and Both Are in a Recessionary