A fiscal policy action to close a recessionary gap is to

Question

Quizplus · Accepted Answer

Increasing government purchases will increase aggregate demand, closing the recessionary gap by stimulating production and increasing employment levels. Increasing taxes and decreasing transfer payments would reduce aggregate demand, making the recessionary gap worse. Increasing the marginal propensity to consume and potential output may help in the long run but are not immediate solutions to closing a recessionary gap.

A Fiscal Policy Action to Close a Recessionary Gap Is