Based on the experience of the Great Depression and the New Deal, which one of the following strategies would be most likely to stimulate recovery from a serious economic recession?
A) increase trade restrictions and tariffs to save jobs and enhance tax revenue
B) a reduction in the money supply in order to strengthen the dollar and combat inflation
C) keep taxes low in order to stimulate production and minimize the decline in personal and business income
D) institute frequent policy changes in order to search for and find the policy combination that would be most effective

Question

Quizplus · Accepted Answer

Keeping taxes low can stimulate production and boost income for both individuals and businesses, leading to economic growth. This approach was successfully used in the Reagan administration and has been favored by many conservative economists. Trade restrictions and tariffs could lead to a decrease in international trade and harm overall economic growth. A reduction in the money supply could lead to deflation and decrease consumer spending, further harming the economy. Instituting frequent policy changes could create uncertainty and be detrimental to businesses and consumers.

Based on the Experience of the Great Depression and the New