To close a recessionary gap with fiscal policy, the government could:
A) increase national savings so that the interest rate falls.
B) lower the annual income exempt from paying the personal income tax.
C) lower the corporate income tax rate.
D) lower the amount of unemployment insurance benefits.

Question

Quizplus · Accepted Answer

Lowering the corporate income tax rate can stimulate investment and spending by businesses, which can help close a recessionary gap by increasing aggregate demand.

To Close a Recessionary Gap with Fiscal Policy, the Government