Asked by Kericia Halliday on May 27, 2024

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All of the following are likely to be effective at eliminating a recessionary gap except one.Which is the exception?

A) Reducing Social Security payments to beneficiaries
B) Reducing personal income taxes
C) Increasing government expenditures on the interstate highway network
D) Increasing farm subsidies
E) Reducing corporate income taxes

Recessionary Gap

The situation where an economy's real GDP is less than its potential GDP, indicating underutilized resources and economic slack.

Social Security

Social Security is a government program that provides financial assistance to individuals during retirement, disability, or upon the death of a primary wage earner.

Corporate Income Taxes

Taxes levied on the profit of corporations, influencing their investment decisions and bottom line.

  • Understand the mechanisms and effects of fiscal policies on aggregate demand and GDP.
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Maher BakhshMay 31, 2024
Final Answer :
A
Explanation :
Reducing Social Security payments to beneficiaries would likely decrease overall spending in the economy, making it less effective at eliminating a recessionary gap. The other options could increase spending, either through tax cuts or government spending on infrastructure or subsidies.