If Congress wanted to counteract the effects of a recession it could
A)increase tax rates.
B)increase taxes by a fixed amount.
C)increase government purchases.
D)decrease defense spending.

Question

Quizplus · Accepted Answer

Increasing government purchases is a key way to counteract a recession, as it injects more money into the economy and stimulates demand. Increasing taxes could actually worsen the effects of a recession by reducing consumer spending and business investment. Decreasing defense spending could also have negative economic consequences, as it could cause job losses in the defense industry and related sectors. Increasing taxes by a fixed amount without considering the state of the economy would also not necessarily be an effective means of combating a recession.

If Congress Wanted to Counteract the Effects of a Recession