Assume That an Inflationary Gap Must Be Closed by Reducing

question 61

Multiple Choice

Assume that an inflationary gap must be closed by reducing aggregate expenditures. If consumers refuse to cut spending on consumption and producers won't cut demand for investment goods, the President:

• A) can do nothing.
• B) must build more roads.
• C) must borrow from Wall Street.
• D) must cut government spending.