If the economy were in a recession,which of the following policies would a person who favors an active approach to policy be most likely to support?
A)The economy should be left to cure itself without government intervention.
B)The Fed should sell U.S.government securities in its open-market operations.
C)The Fed should raise the discount rate.
D)Government purchases should increase.
E)The Fed should raise the required reserve ratio.

Question

Quizplus · Accepted Answer

A person who favors an active approach to policy would support increasing government purchases during a recession as this would stimulate aggregate demand and help to boost the economy. Option A is not a preferred option as it suggests no intervention, while options B, C, and E all involve actions by the Fed rather than the government, and may not be sufficient to address the economic slowdown.

If the Economy Were in a Recession,which of the Following