What set of policies could the government use to close an expansionary gap?
A)decrease taxes,increase government purchases and transfer payments
B)increase taxes,government purchases,and transfer payments
C)increase taxes and transfer payments and decrease government purchases
D)increase taxes,decrease transfer payments and government purchases
E)decrease taxes,transfer payments,and government purchases

Question

Quizplus · Accepted Answer

To close an expansionary gap, the government should implement contractionary fiscal policies, which include increasing taxes and decreasing transfer payments and government purchases to reduce aggregate demand.

What Set of Policies Could the Government Use to Close