How does the government typically change fiscal policy to try to improve the U.S. economy during a recession?A.By decreasing the amount of money in circulationB.By increasing taxes on businesses and individualsC.By increasing the amount of money in circulationD.By lowering taxes on businesses and individualsSUBMITarrow_backPREVIOUS
Question
How does the government typically change fiscal policy to try to improve the U.S. economy during a recession?A.By decreasing the amount of money in circulationB.By increasing taxes on businesses and individualsC.By increasing the amount of money in circulationD.By lowering taxes on businesses and individualsSUBMITarrow_backPREVIOUS
Solution
During a recession, the U.S. government typically tries to improve the economy by increasing the amount of money in circulation and by lowering taxes on businesses and individuals.
Here's a step-by-step explanation:
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Increasing the amount of money in circulation: This is done through monetary policy, which is managed by the Federal Reserve. By increasing the money supply, the government aims to lower interest rates, making it cheaper for businesses and individuals to borrow money. This encourages spending and investment, which can stimulate economic growth.
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Lowering taxes on businesses and individuals: This is a fiscal policy measure. By reducing taxes, the government leaves businesses and individuals with more disposable income. This can lead to increased consumer spending, which drives demand and can help stimulate the economy.
So, the correct answers are C. By increasing the amount of money in circulation and D. By lowering taxes on businesses and individuals.
Similar Questions
How does the government typically change fiscal policy to try to keep the economy stable during a period of rapid economic growth?A.Lowering taxes on businesses and individualsB.Increasing the amount of money in circulationC.Decreasing the amount of money in circulationD.Increasing taxes on businesses and individualsSUBMITarrow_backPREVIOUS
During a recession, expansionary fiscal policy may involve: A. Cutting social welfare programs B. Raising interest rates to control inflation C. Implementing trade barriers to protect domestic industries D. Increasing government spending and reducing taxes
To ameliorate the effects of a recession, a government could enact appropriate policies including: a. increasing government purchases. b. decreasing defence spending. c. increasing tax rates d. increasing taxes by a fixed amount.
To solve a recessionary gap, by using Fiscal Policy, the Federal government would decrease taxes and decrease government expenditure. Group of answer choicesTrueFalse
fiscal policy is used in response to recession.
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