Assume the economy is in an inflationary gap equilibrium: real GDP equals $22 trillion, which exceeds potential GDP of $21 trillion. Which of the following policies could close this inflationary gap and reduce inflation, other things held constant?
a. None of the above answers is correct.
b. Increasing taxes and reducing government expenditures
c. Decreasing taxes and not changing government expenditures
d. Increasing government expenditures and decreasing taxes
e. Increasing government expenditures and not changing taxes