If the economy is slipping into a recession,which of the following would be an appropriate fiscal policy?
A)an increase in the money supply and a decrease in interest rates
B)a decrease in government purchases
C)a decrease in taxes
D)a decrease in oil prices

Question

Quizplus · Accepted Answer

During a recession, households and businesses tend to spend less, which slows down the economy further. To counter this, the government can decrease taxes, putting more money into the hands of consumers and businesses, stimulating spending and helping to boost the economy. Options A, B, and D are not appropriate fiscal policies during a recession. An increase in the money supply and a decrease in interest rates may lead to inflation rather than a boost in spending, while a decrease in government purchases could lead to job losses and further economic decline. A decrease in oil prices could have a positive impact on the economy but is not a fiscal policy that can be implemented by the government.

If the Economy Is Slipping into a Recession,which of the Following