To eliminate a recessionary gap,Keynesian theory indicates that government should
A) increase taxes.
B) decrease taxes.
C) increase government purchases.
D) decrease government purchases.
E) b or c

Question

Quizplus · Accepted Answer

Keynesian theory suggests that to combat a recessionary gap, the government should either decrease taxes or increase government purchases. Both actions are designed to increase aggregate demand, thereby stimulating economic activity and reducing the recessionary gap.

To Eliminate a Recessionary Gap,Keynesian Theory Indicates That Government Should