Question: Suppose the economy is in an expansionary gap. A consulting firm advises the government to reduce spending on infrastructure. but also to reduce income

Suppose the economy is in an expansionary gap. A consulting firm advises

the government to reduce spending on infrastructure. but also to reduce income

Suppose the economy is in an expansionary gap. A consulting firm advises the government to reduce spending on infrastructure. but also to reduce income taxes by the same amount so the net effect is budget neutral. Assuming that the government follows the think tank's advice, we will observe C) no change in GDP C) an increase in GDP O a decrease in GDP O an immediate increase followed by a gradual decrease in GDP insufficient information to answer the question

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