The main idea behind using fiscal policy to combat a recession is:
A. the government will make up for the decreased saving in the economy, preventing a downward spiral.
B. the government will supplement the increased saving in the economy, contributing to an upward spiral.
C. the government will make up for the decreased spending in the economy, preventing a downward spiral.
D. the government will supplement the increased spending in the economy, contributing to an upward spiral.
Ans: C. the government will make up for the decreased spending in the economy, preventing a downward spiral.
You might also like to view...
Why are time series data unlikely to give an accurate estimate of demand?
What will be an ideal response?
"If the currency drain ratio increases, the monetary base decreases." Explain whether the previous statement is correct or incorrect
What will be an ideal response?
Suppose the nominal interest rate is five percent, and the inflation rate rises from two percent to three percent
Might an increase in the nominal interest rate to 5.5 percent be consistent with the Taylor Principle? If not, what consequences might ensue?
Holding all other things constant, when the price level falls, interest rates:
a. rise and firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. b. rise and firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. c. falls and firms want to borrow less for new plants and equipment and households want to borrow more for homebuilding. d. falls and firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding.