If the government sought to end a recession, which of the following would be an appropriate policy?

Question

Quizplus · Accepted Answer

Decreasing taxes and increasing government purchases is an appropriate policy to end a recession because it stimulates aggregate demand. When taxes are decreased, individuals and businesses have more disposable income which they can spend, increasing consumption and investment. Additionally, government purchases increase demand for goods and services which can lead to increased production and employment, further stimulating the economy. Increasing taxes and decreasing government purchases would have the opposite effect and may worsen a recession.

If the Government Sought to End a Recession, Which of the Following