Statement I: To lower a recessionary gap we would raise the C + I + G + Xn line.
Statement II: The best way to eliminate a recessionary gap is to balance the federal budget.

Question

Quizplus · Accepted Answer

Statement I is true because to lower a recessionary gap, an increase in aggregate demand is necessary, which can be achieved by raising the C + I + G + Xn line. 
Statement II is false because balancing the federal budget does not necessarily lead to an increase in the aggregate demand and may even decrease it further, worsening the recessionary gap.

Statement I: to Lower a Recessionary Gap We Would Raise