Natural real GDP an example of expansionary fiscal policy

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Reference no: EM131007877

a) Suppose the economy had been producing at natural real GDP but is now experiencing a recession. Which of the following are discretionary fiscal policies that could bring the economy closer to natural real GDP? Check all that apply.

A tax cut

A tax increase

A reduction in spending on education

Additional spending on national park facilities

b) In the preceding scenario, is the discretionary fiscal policy needed to bring the economy closer to natural real GDP an example of expansionary fiscal policy or contractionary fiscal policy?

Contractionary

Expansionary

Reference no: EM131007877

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