To eliminate a recessionary gap,the government can ________ government expenditures on goods and services or ________ taxes.

Question

Quizplus · Accepted Answer

In order to eliminate a recessionary gap, the government needs to increase aggregate demand. This can be achieved by either increasing government expenditures on goods and services, which would directly increase aggregate demand, or by decreasing taxes, which would increase disposable income and also lead to an increase in aggregate demand. Thus, choice B is the correct answer as it involves increasing government expenditures and decreasing taxes, both of which would increase aggregate demand and help eliminate the recessionary gap.

To Eliminate a Recessionary Gap,the Government Can ________ Government Expenditures