Monetary and fiscal policies have the potential to make a recession worse.

Question

Quizplus · Accepted Answer

Improperly implemented monetary and fiscal policies, such as raising interest rates too quickly or cutting government spending too drastically, can exacerbate a recession by reducing consumer and business spending and increasing unemployment. However, when used correctly, these policies can stimulate economic growth and help pull a country out of a recession.

Monetary and Fiscal Policies Have the Potential to Make a Recession