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5. If an economy has a recessionary expenditure gap, the government could attempt to bring the economy back toward the full-e
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Answer : The answer is decreasing taxes or increasing government expenditures.

Aggregate demand increase when tax decrease or government spending increase. Here the economy is in a recessionary gap. To eliminate this recessionary gap the government have to decrease the taxes or have to increase the government spending. As a result, the aggregate demand will increase which will shift the aggregate demand curve to rightward and the economy will reach at full employment level.

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