If firms were faced with greater uncertainty because of concern that oil prices might rise, they might decrease expenditures on capital. In response to this change, someone who advocated "lean against the wind" policies might advocate decreasing which of the following?
A)the money supply
B)taxes
C)government expenditures
D)inflation

Question

Quizplus · Accepted Answer

Decreasing taxes is a fiscal policy tool used to stimulate the economy by increasing disposable income for consumers and businesses, encouraging spending and investment, which can counteract the negative effects of reduced capital expenditures due to uncertainty.

If Firms Were Faced with Greater Uncertainty Because of Concern