The effects of a decline in the value of financial assets,such as stocks,on consumption and the economy might be offset by

Question

Quizplus · Accepted Answer

Increasing government spending can stimulate the economy by creating jobs and increasing demand for goods and services, which can help offset the negative effects of a decline in the value of financial assets. This is known as fiscal policy. Decreasing the money supply (B) would likely have the opposite effect, as it would reduce consumer spending and business investment. Increasing taxes (C) would also likely reduce consumer spending and business investment, and could further exacerbate the negative effects of a decline in financial asset values. Therefore, A is the best choice.

The Effects of a Decline in the Value of Financial