### Multiple Choice Question on Economic Policies**Question:**_All of the following are likely to be effective at eliminating a recessionary gap except one. Which is the exception?_- a. Reducing personal income taxes- b. Increasing government expenditures on the interstate highway network- c. Reducing Social Security payments to beneficiaries- d. Increasing farm subsidies- e. Reducing corporate income taxes**Explanation:**Options a, b, d, and e are all examples of fiscal policies that can stimulate the economy and help eliminate a recessionary gap by either increasing aggregate demand or supporting economic activities directly. However, option c (Reducing Social Security payments to beneficiaries) is an example of contractionary fiscal policy, as it effectively reduces the disposable income of individuals, thereby decreasing overall consumption and demand in the economy.**Answer:**- **c. Reducing Social Security payments to beneficiaries****Note:** There are no graphs or diagrams associated with this question.

Recessionary gap: It means a situation wherein the real GDP is lower than the potential GDP at the…

All of the following are likely to be effective at eliminating a recessionary gap except one. Which is the exception? a. Reducing personal income taxes O b. Increasing government expenditures on the interstate highway network O . Reducing Social Security payments to beneficiaries d. Increasing farm subsidies e. Reducing corporate income taxes

All of the following are likely to be effective at eliminating a recessionary gap except one. Which is the exception? a. Reducing personal income taxes O b. Increasing government expenditures on the interstate highway network O . Reducing Social Security payments to beneficiaries d. Increasing farm subsidies e. Reducing corporate income taxes

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter23: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 1QR

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