To reduce an expansionary gap,the government could

Question

Quizplus · Accepted Answer

To reduce an expansionary gap, the government needs to decrease aggregate demand. One way to do this is by increasing taxes, which reduces disposable income and decreases consumer spending, leading to a decrease in aggregate demand. Increasing spending on goods and services or military spending would only increase aggregate demand and exacerbate the expansionary gap. Decreasing taxes would also increase aggregate demand and worsen the expansionary gap.

To Reduce an Expansionary Gap,the Government Could