Which of the following is a countercyclical policy?
A) Tax cuts are made during an economic expansion.
B) Tax cuts are made during a recession.
C) Government purchases are decreased during a recession.
D) Government purchases are increased during an expansion.

Question

Quizplus · Accepted Answer

Countercyclical policies are economic policies that are implemented to counteract the economic cycle. Tax cuts made during a recession are an example of a countercyclical policy because they aim to stimulate economic activity by increasing disposable income when the economy is weak.

Which of the Following Is a Countercyclical Policy