AP Macroeconomics Question 450: Answer and Explanation

Test Information

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Question: 450

13. If the economy were experiencing a recessionary gap, choose the option below that would be an appropriate fiscal policy to eliminate the gap, and the predicted impact of the policy on real GDP and unemployment.

FISCAL POLICY     REAL GDP     UNEMPLOYMENT

  • A. Increase taxes.     Increase     Decrease
  • B. Decrease spending.     Decrease     Increase
  • C. Decrease taxes.     Increase     Increase
  • D. Increase money supply.     Increase     Decrease
  • E. Decrease taxes.     Increase     Decrease

Correct Answer: E

Explanation:

E-Know how fiscal policy affects real GDP and unemployment.