Answer one of the following options

250 WORDS

Option A: Describe the fiscal policy remedies that a Keynesian economist might prescribe to close a recessionary gap. What impact would these policy changes have on the federal budget deficit and the public debt?

Option B: What type of relationship exists between the marginal propensity to consume (MPC) and the multiplier? Explain why this relationship exists. Give a hypothetical numerical example to help support your answer.

Answer Preview……………..

A recessionary gap, also known as an inflationary gap is a term that is used to describe an economy that is operating below the full-employment equilibrium. In such a scenario, the level of the GDP within the country is usually lower than full employment (Kose, Terrones, & International Monetary Fund. 2015). As a result, there is a downward pressure on the prices within the economy in the long-run. When a recessionary gap is present in the market, a………………………….
APA 268 words