A country is experiencing a recessionary gap and is considering various fiscal policy actions. Which of the following actions would most effectively stimulate economic activity and help restore full employment? Classify each action into one of the four categories: 'Tax Reduction', 'Increased Government Spending', 'Transfer Payments', or 'Ineffective Action'.

During a recessionary gap, when the economy is not producing enough goods and services, fiscal policy can play a key role in stimulating activity. Increased government spending is often the most effective action because it directly injects money into the economy, creating jobs and boosting demand. For example, if the government builds new roads or schools, it not only employs construction workers but also increases business for suppliers and local shops. Tax reductions can also help by putting more money in people's pockets, encouraging them to spend, but their effect is usually slower. Transfer payments, like unemployment benefits, provide support to those in need but may not stimulate the economy as quickly as direct government spending does.