Covid-19 caused the Canadian economy to fall into recession. In this course you learnt that a recessionary gap can be removed by using an expansionary fiscal policy or an easy money policy. The Canadian government chose to use both policies.

1. Explain fully how an expansionary fiscal policy can remove a recessionary gap.
2. Explain fully how an easy money policy can remove a recessionary gap
3. What would be a good reason for using both policies?

Create your own graphs or refer to graphs in your textbook to illustrate your answer.