Fiscal policy used to close a recessionary gap is known as _____

Question

Quizplus · Accepted Answer

To close a recessionary gap, the government would need to use expansionary fiscal policy, which involves increasing government spending and/or reducing taxes to stimulate economic activity. Discretionary fiscal policy refers to deliberate government actions to influence the economy, which could include expansionary or contractionary policies depending on the goal. Automatic stabilizers, while they can mitigate the impact of economic fluctuations, do not involve deliberate policy action. Contractionary fiscal policy would be used to close an inflationary gap, rather than a recessionary one. Monetary policy refers to actions taken by the central bank to influence the money supply and interest rates, rather than government spending and taxation.

Fiscal Policy Used to Close a Recessionary Gap Is Known