What can government policies do about the business cycle?
A) Government policies can completely negate the business cycle.
B) Government policies can eliminate expansions but not recessions.
C) Government policies can reduce the severity of the business cycle.
D) Government policies cannot affect the business cycle at all.

Question

Quizplus · Accepted Answer

Government policies can affect the business cycle by using fiscal policy (changes in government spending and taxation) and monetary policy (changes in the money supply and interest rates) to reduce the severity of economic downturns and stimulate growth during a recession. However, it is unlikely that government policies can completely eliminate the business cycle, as it is a natural part of economic activity.

What Can Government Policies Do About the Business Cycle