A Fiscal Policy Action to Close a Recessionary Gap Is

question 79

Multiple Choice

A fiscal policy action to close a recessionary gap is to

• A) increase taxes.
• B) decrease transfer payments.
• C) increase government purchases.
• D) increase the marginal propensity to consume.
• E) increase potential output.

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Definitions:

Wide Imitation

The extensive replication of a product, service, or innovation by multiple competitors or industry participants, often signalling the success or desirability of the original.

Creative Destruction

A process through economic innovation in which older models or structures are destroyed to make way for new advancements.

Diffusion

The process by which a technological innovation, cultural trend, or new idea spreads through a population or society.

Innovation

The act of introducing something new or improving an existing product, service, or process to enhance productivity or create value.