Assume that the economy is in the midst of a severe recession.Which of the following policies would be appropriate?

Question

Quizplus · Accepted Answer

During a severe recession, the government should focus on stimulating economic growth and increasing spending. Option A and B suggest reducing spending, whereas option C suggests postponing spending, which would do little to stimulate the economy. Option E suggests increasing taxes, which would further reduce consumer spending. Therefore, reducing federal tax rates on personal and corporate income would be the best policy option to stimulate economic growth and incentivize consumer spending.

Assume That the Economy Is in the Midst of a Severe