Using fiscal policy, to increase real GDP and employment the government could _________expenditure on goods and services or _________ taxes.
A) increase; decrease
B) decrease; decrease
C) increase; increase
D) decrease; increase

Question

Quizplus · Accepted Answer

By increasing government expenditure on goods and services, the government increases the demand for goods and services in the economy, leading to an increase in real GDP and employment. By decreasing taxes, consumers have more disposable income and are more likely to spend, leading to an increase in demand and a subsequent increase in real GDP and employment.

Using Fiscal Policy, to Increase Real GDP and Employment the Government