Governments often attempt to fight a recession by
A)increasing spending and cutting taxes which shifts the aggregate demand curve to the right.
B)increasing spending and cutting taxes which shifts the aggregate demand curve to the left.
C)increasing taxes to increase the supply of loanable funds.
D)discouraging private investment.
E)closing the economy to competition from foreign firms.

Question

Quizplus · Accepted Answer

By increasing spending and cutting taxes, the government is able to stimulate economic activity and increase consumer and business spending, which will shift the aggregate demand curve to the right. This can lead to increased production and employment, helping to fight a recession.

Governments Often Attempt to Fight a Recession by