(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 did not respond to the fiscal stimulus as well as hoped, as they put more income into saving and repaying debt.

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