If Congress votes to increase government purchases and at the same time decrease personal income taxes, they
A) have decided to balance the federal budget.
B) have voted for the proper policy to counteract a recession.
C) have voted for the proper policy to counteract inflation and an economic boom.
D) are trying to achieve a federal budget surplus.

Question

Quizplus · Accepted Answer

By increasing government purchases, Congress is providing a fiscal stimulus to the economy, which can help counteract a recession. Additionally, by decreasing personal income taxes, Congress is providing individuals with more disposable income, which can also help stimulate economic growth. This policy is therefore appropriate for counteracting a recession.

If Congress Votes to Increase Government Purchases and at the Same