If the government wanted to try to counteract the effects of a recession,it could
A) increase tax rates.
B) increase taxes by a fixed amount.
C) increase government purchases.
D) decrease defence spending.

Question

Quizplus · Accepted Answer

Increasing government purchases, such as infrastructure projects or public works programs, has been shown to stimulate economic growth and create jobs during a recession.

Answer: D 
 Decreasing defence spending can free up funds that can be reallocated to other areas that could stimulate economic growth, such as education or healthcare. However, this may not be an effective solution if the defence industry is a significant driver of the economy.

A and B are not ideal solutions during a recession as increasing taxes can decrease consumer spending, which can exacerbate the effects of a recession.

If the Government Wanted to Try to Counteract the Effects