A procyclical ﬁscal policy, like those of many state and local governments in the United States, tends to
A) worsen recessions or inﬂation.
B) become contractionary during inﬂationary periods.
C) raise government spending or cut taxes during recessions.
D) increase the budget deﬁcit during recessionary periods.

Question

Quizplus · Accepted Answer

Procyclical fiscal policies exacerbate economic fluctuations by increasing spending or cutting taxes during boom times, which can worsen inflation, and by reducing spending or increasing taxes during recessions, which can deepen the downturn.

A Procyclical ﬁScal Policy, Like Those of Many State and Local