Economists are in general agreement that fiscal policy will stabilize the economy most when:

Question

Quizplus · Accepted Answer

In an economic downturn, fiscal policy should aim to stimulate growth and create jobs, which may require government spending or tax reductions that result in budget deficits. During economic expansion, fiscal policy should aim to balance the budget and reduce debt, which can be achieved by raising taxes or reducing government spending. In this way, deficits are incurred during recessions and surpluses are incurred during booms, making A the best choice.

Economists Are in General Agreement That Fiscal Policy Will Stabilize