To eliminate an inflationary gap,Keynesian theory indicates that government should
A) increase taxes.
B) decrease taxes.
C) increase government purchases.
D) decrease government purchases.
E) either a or d

Question

Quizplus · Accepted Answer

To eliminate an inflationary gap, Keynesian theory suggests that the government should either increase taxes or decrease government purchases. Both actions would reduce the aggregate demand in the economy, helping to cool down inflationary pressures.

To Eliminate an Inflationary Gap,Keynesian Theory Indicates That Government Should