How would a country correct an inflationary gap

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Reference no: EM133433809

Questions:

a. How would a country correct an inflationary gap, using changes in government spending? By increasing government spending by an amount equal to the inflationary gap divided by the multiplier By reducing government spending by an amount equal to the inflationary gap divided by the multiplier By reducing government spending by an amount equal to the inflationary gap times the multiplier

b. How would a country correct a recessionary gap, using changes in government spending? By increasing government spending by an amount equal to the recessionary gap times the multiplier By reducing government spending by an amount equal to the recessionary gap divided by the multiplier By increasing government spending by an amount equal to the recessionary gap divided by the multiplier

Reference no: EM133433809

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