If the government increases spending to move the economy closer to full employment,the government is most likely trying to

Question

Quizplus · Accepted Answer

Increasing government spending is a tool used to increase aggregate demand, which can help close a contractionary gap and bring the economy closer to full employment. Choice B is incorrect because raising the price level is not a goal of the government. Choice C is incorrect because increasing aggregate demand is not necessary to close an expansionary gap, which occurs when the economy is already operating at above full employment. Choice D is incorrect because increasing aggregate supply would not help close an expansionary gap.

If the Government Increases Spending to Move the Economy Closer