If the government pursues discretionary fiscal policy:
A) it should pursue balanced budget cuts in taxes and cuts in government spending, when the economy is experiencing recession.
B) it should increase taxes and/or cut government spending, when the economy is experiencing recessionary gaps.
C) it should increase taxes and/or cut government spending, when the economy is experiencing inflationary gaps.
D) it should do nothing and let the automatic stabilizers do their jobs.
Correct Answer:
Verified
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A)
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