Grossmont College Recession Gap and Fiscal Policy Essay

Answer one of the following options (Option A or Option B):

Option A: After reading Chapter 11 in the textbook and the lecture notes posted in Module #5, describe the fiscal policy remedies that a Keynesian economist might prescribe to close a recessionary gap. What impact would these policy changes have on the federal budget deficit and the public debt?

Option B: After reading Chapter 10 in the textbook and the lecture notes posted in Module #5, describe what type of relationship (inverse or direct) exists between the marginal propensity to consume (MPC) and the spending multiplier? Explain why this relationship exists and give a hypothetical numerical example to help support your answer.