Which of the following fiscal policy actions would definitely cause an increase in the size of a recessionary gap?
A) cuts in government spending
B) cuts in taxes
C) increases in taxes and increases in government spending
D) cuts in taxes and increases in government spending

Question

Quizplus · Accepted Answer

Cuts in government spending reduce aggregate demand, which can exacerbate a recessionary gap by decreasing total spending in the economy.

Which of the Following Fiscal Policy Actions Would Definitely Cause