When consumers are very reluctant to spend in a recessionary environment,the government's MOST effective strategy is to:
A) increase spending through bond financing.
B) decrease income taxes.
C) decrease corporate taxes.
D) do nothing;the economy will self-correct in the short run.

Question

Quizplus · Accepted Answer

In a recessionary environment, consumers are reluctant to spend due to a lack of confidence in the economy. Therefore, the government should increase spending through bond financing to encourage economic growth and stimulate demand. This will create job opportunities, increase income, and eventually lead to an increase in consumer spending. Decreasing income or corporate taxes may provide some relief for consumers and businesses, but it may not be enough to stimulate demand and boost economic growth in the long run. Doing nothing to address the recession would not help the situation and may exacerbate it.

When Consumers Are Very Reluctant to Spend in a Recessionary