Question

During a​ recession, policymakers should A. identify the sectors of the economy that are the weakest...

During a​ recession, policymakers should

A.

identify the sectors of the economy that are the weakest and spend less there.

B.

determine the right policy based on the status of the deficit.

C.

either increase government spending or cut taxes.

D.

either decrease government spending or increase taxes.

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Homework Answers

Answer #1

During a recession policymakers should either increase government spending or cut taxes

So option C is the correct statement.

Explanation-

When government spending increases then money supply increases and so demand is created and if demand is created then production increases and output will increase.

If taxes are reduced then people have more money so their purchasing power increases and so demand is created and due to this production increases and so output will increase.

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