Question

With crises caused by macroeconomic​ imbalances,

A.it is usually difficult to avoid a recession.

B.austerity programs are not needed.

C.the money supply should be increased.

D.expansionary policies can be used to correct the crisis.

Answer 1

Option A

A.it is usually difficult to avoid a recession.

The macroeconomics imbalances make difficult to use any policy to avoid recessions as each policy has some exceptions on the basis of data and some theories get criticized in time of such imbalances because the government usually uses the required policies but can not control it because the reasons of the economic situations may change as the dependencies on the different markets may affect the economy.

Ex. generally, the housing market is the reason for the crisis in an economy but the reasons for the crisis may change or the different big market may emerge where there may not work.