All of the following might be effective in eliminating a contractionary gap except one.Which is the exception?
A)reducing Social Security payments to beneficiaries
B)reducing personal income taxes
C)increasing expenditures for the interstate highway system
D)increasing farm subsidies
E)reducing corporate income taxes

Question

Quizplus · Accepted Answer

Reducing Social Security payments to beneficiaries would likely have a contractionary effect as it reduces aggregate demand in the economy. All other options listed would increase aggregate demand, which could help to eliminate a contractionary gap. Reducing personal income taxes, increasing expenditures for the interstate highway system, increasing farm subsidies, and reducing corporate income taxes are all policies that would increase spending and potentially lead to economic growth.

All of the Following Might Be Effective in Eliminating a Contractionary