Suppose the economy goes into recession. Which of the following is a list of things policymakers could do to try to end the recession?
A) increase the money supply, increase taxes, and increase government spending
B) increase the money supply, increase taxes, and decrease government spending
C) increase the money supply, decrease taxes, and increase government spending
D) decrease the money supply, increase taxes, and decrease government spending

Question

Quizplus · Accepted Answer

Increasing the money supply makes it easier for people and firms to borrow and invest, which can stimulate spending and increase economic activity. Decreasing taxes can also increase people's disposable income, which can also lead to more spending. Increasing government spending can also provide a boost to the economy by creating jobs and stimulating demand. On the other hand, decreasing the money supply, increasing taxes, and decreasing government spending can all have a contractionary effect on the economy and make the recession worse.

Suppose the Economy Goes into Recession