An Active Stabilization Policy Designed to Limit the Size of Government

Multiple Choice

An active stabilization policy designed to limit the size of government would

A) raise G to eliminate a recessionary gap and lower taxes to eliminate an inflationary gap.
B) raise G to eliminate a recessionary gap and raise taxes to eliminate an inflationary gap.
C) reduce taxes to eliminate a recessionary gap and raise G to eliminate an inflationary gap.
D) reduce taxes to eliminate a recessionary gap and reduce G to eliminate an inflationary gap.