Which of the following options could be used to eliminate a recessionary gap?
A) Increase government spending.
B) Decrease government spending.
C) Decrease investment.
D) Increase taxes.

Question

Quizplus · Accepted Answer

Increasing government spending can stimulate the economy by increasing aggregate demand and filling the recessionary gap. This is done by putting more money into the economy, creating jobs and increasing consumer spending. Decreasing government spending, decreasing investment or increasing taxes can further depress the economy, making the recessionary gap wider.

Which of the Following Options Could Be Used to Eliminate