(Last Word) In response to the Great Recession, the federal government engaged in significant deficit-funded spending, but it did not fully achieve the desired result.Which of the following best explains why the fiscal policy actions fell short of their objective?
A)Monetary policy counteracted fiscal policy, keeping the unemployment rate from falling as much as intended.
B)Consumers did not respond to the fiscal stimulus as well as hoped, as they put more income into saving and repaying debt.
C)Although the fiscal stimulus increased consumer spending significantly, it mostly went to purchase foreign-produced goods and services.
D)The fiscal stimulus caused massive inflation that further disrupted economic activity.

Question

Quizplus · Accepted Answer

Consumers increased their savings and debt repayment instead of spending, which limited the effectiveness of the fiscal stimulus.

(Last Word) in Response to the Great Recession, the Federal