During a recession:

Question

During a recession:

Quizplus · Accepted Answer

During a recession, automatic increases in government expenditures (such as unemployment benefits) can help to stabilize the economy by increasing demand and creating jobs. This is known as fiscal stimulus. Automatic decreases in government expenditures, such as cutting spending to balance the budget, can further worsen the recession by reducing demand and potentially causing more job losses. Automatic increases in tax revenues (such as through higher income from hiring and spending) can also contribute to stabilizing the economy, but this is not as reliable or immediate as government spending. Therefore, the best choice is B.

During a Recession