QQuestionAccounting
QuestionAccounting
An appropriate fiscal policy for a severe recession is:
Multiple Choice
a decrease in tax rates.
an increase in interest rates.
a decrease in government spending.
appreciation of the dollar.
5 months agoReport content
Answer
Full Solution Locked
Sign in to view the complete step-by-step solution and unlock all study resources.
Step 1: Identify the correct fiscal policy for a severe recession from the given options.
The correct fiscal policy for a severe recession is to increase government spending or decrease tax rates. This helps stimulate aggregate demand and supports economic growth.
Step 2: Analyze the given options and eliminate the incorrect ones.
Option b, an increase in interest rates, is incorrect because it would decrease investment and consumption, worsening the recession. Option c, a decrease in government spending, is also incorrect as it would further reduce aggregate demand and hinder economic recovery. Option d, appreciation of the dollar, is not directly related to fiscal policy and is not the best approach to addressing a severe recession.
Final Answer
The appropriate fiscal policy for a severe recession is a decrease in tax rates.
Need Help with Homework?
Stuck on a difficult problem? We've got you covered:
- Post your question or upload an image
- Get instant step-by-step solutions
- Learn from our AI and community of students