Asked by MIRTEMUR SHAKIROV on May 01, 2024
Verified
If the economy is expecting a severe recession,which fiscal policy would you recommend?
A) Reduce spending for welfare programs.
B) Reduce overall government spending.
C) Increase taxes to reduce consumption.
D) Reduce personal and corporate income taxes.
Severe Recession
An extended period of significant decline in economic activity across the economy, typically characterized by high unemployment, low consumer spending, and reduced industrial production.
Fiscal Policy
Government policies regarding taxation and spending that influence the economy by changing the level of income and aggregate demand.
Welfare Programs
Governmental provisions designed to support the well-being of citizens in need, including financial assistance, healthcare, and food support.
- Examine the effects of fiscal policy choices on unemployment and inflation.
Verified Answer
ZK
Zybrea KnightMay 06, 2024
Final Answer :
D
Explanation :
During a severe recession, the government needs to stimulate the economy by increasing spending and boosting consumption. One way to do this is by reducing personal and corporate income taxes, which puts more money in people's pockets and encourages businesses to reinvest in the economy. This can lead to increased spending and job creation, which helps to counteract the effects of the recession.
Learning Objectives
- Examine the effects of fiscal policy choices on unemployment and inflation.