In the short-run Keynesian model, to close a recessionary gap of $5 billion dollars taxes must be:

Question

In the short-run Keynesian model, to close a recessionary gap of $5 billion dollars taxes must be:

A. increased by $5 billion.

B. decreased by $5 billion.

C. increased by more than $5 billion.

D. increased by less than $5 billion.

E. decreased by less than $5 billion.

Answer 1

E. decreased by less than $5 billion.