A fiscal policy action to close a recessionary gap is to:
A)increase taxes.
B)increase transfer payments.
C)decrease government purchases.
D)decrease the marginal propensity to consume.

Question

Quizplus · Accepted Answer

To close a recessionary gap, planned aggregate expenditures need to rise. Increased transfer payments will increase household disposable income and planned consumption expenditures, which will increase planned aggregate expenditures.

A Fiscal Policy Action to Close a Recessionary Gap Is