If the economy is slipping into a recession, which of the following would be an appropriate fiscal policy?

Question

Quizplus · Accepted Answer

A decrease in taxes would be an appropriate fiscal policy during a recession as it would increase disposable income and consumer spending, which would stimulate economic growth. A decrease in government purchases (choice B) could lead to a further decline in demand, worsening the recession. An increase in the GST (choice E) would have the same effect by reducing consumer spending. Increasing the money supply and decreasing interest rates (choice A) is a monetary policy, not a fiscal policy. Decreasing oil prices (choice D) is not directly related to fiscal policy.

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