According to the active policy position,eliminating a recessionary gap
A)can only be achieved by decreasing wages
B)requires a public policy of wage and price controls
C)should be accomplished by stimulating aggregate demand
D)will increase unemployment
E)will cause a recession

Question

Quizplus · Accepted Answer

According to the active policy position, the most effective way to eliminate a recessionary gap is by stimulating aggregate demand. This can be achieved through policies such as increasing government spending or reducing taxes, which can lead to increased consumer spending and business investment. Decreasing wages (A) would likely lead to lower consumer spending and further exacerbate the recessionary gap. Wage and price controls (B) are not typically favored by economists and policymakers because they can create market inefficiencies and unintended consequences. Eliminating a recessionary gap should not necessarily lead to increased unemployment (D) or cause a recession (E).

According to the Active Policy Position,eliminating a Recessionary Gap