Which fiscal policy action is likely to be taken during a recession?
Practice Questions
Q1
Which fiscal policy action is likely to be taken during a recession?
Increase taxes
Decrease government spending
Increase government spending
Reduce transfer payments
Questions & Step-by-Step Solutions
Which fiscal policy action is likely to be taken during a recession?
Step 1: Understand what a recession is. A recession is a period when the economy is not doing well, and people are spending less money.
Step 2: Know what fiscal policy means. Fiscal policy is how the government uses its money to influence the economy.
Step 3: Recognize that during a recession, the government wants to help the economy recover.
Step 4: Identify the action the government can take. One common action is to increase government spending.
Step 5: Understand why increasing spending helps. When the government spends more money, it creates jobs and encourages people to spend more, which helps the economy grow.
