The Fed can close a recessionary gap by:

A) increasing fiscal expenditure.
B) increasing taxes.
C) decreasing taxes.
D) selling U.S.government bonds.
E) lowering the discount rate.

Recessionary Gap

The difference between the actual output of an economy and its potential output at full employment, during a recession.

Discount Rate

The rate at which the central bank lends money to commercial banks and other financial institutions through its discount window.

Fiscal Expenditure

Government spending, including spending on goods and services, welfare, and public works, financed through taxation or borrowing.