Government spending is often used to:
A) change interest rates, which in turn alters consumption and investment.
B) increase demand in a recession.
C) decrease demand in a recession.
D) target inflation.

Question

Quizplus · Accepted Answer

Government spending is often used to increase demand in a recession. This is because during a recession, there is a decrease in both consumer and business spending, which can lead to a decrease in aggregate demand. By increasing government spending, the government can inject money into the economy and increase aggregate demand, therefore stimulating economic growth.

Government Spending Is Often Used To