If the economy were slipping into a recession, the preferred fiscal and monetary policies would lead to:
A) an increase in taxes and a decrease in the interest rate.
B) a decrease in transfer payments and an increase in the interest rate.
C) an increase in transfer payments and a decrease in the interest rate.
D) an increase in government purchases and an increase in the interest rate.

Question

Quizplus · Accepted Answer

To combat a recession, the preferred fiscal policy is to increase transfer payments (to boost consumer spending) and the preferred monetary policy is to decrease the interest rate (to encourage borrowing and investment).

If the Economy Were Slipping into a Recession, the Preferred