Question

Evaluate the policy options open to a government when the Government wants to close a deflationary gap (negative output gap) and reduce unemployment​

Answer 1

Answer:

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Explanation:

Fiscal policy means using either taxes or government spending to stabilize the economy. Expansionary fiscal policy can close recessionary gaps (using either decreased taxes or increased spending) and contractionary fiscal policy can close inflationary gaps (using either increased taxes or decreased spending).