AP Macroeconomics Question 452: Answer and Explanation

Test Information

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Question: 452

15. Of the following choices, which combination of fiscal and monetary policy would most likely reduce a recessionary gap?

FISCAL POLICY     MONETARY POLICY

  • A. Increase taxes.     Increase the reserve ratio.
  • B. Decrease spending.     Sell Treasury securities.
  • C. Decrease taxes.     Buy Treasury securities.
  • D. Increase spending.     Increase the reserve ratio.
  • E. Decrease taxes.     Increase the discount ratio.

Correct Answer: C

Explanation:

C-Have a strong knowledge of fiscal and monetary policies.