Question

If the economy begins to fall into a recession, one would expect Congress and the president to conduct ________ policy.

expansionary fiscal

expansionary monetary

contractionary fiscal

contractionary monetary

countercyclical monetary

Answer 1

Option 1

expansionary fiscal

Recession means a slow down in economic activities, and the economy needs to stimulate by injecting funds.

Congress and the president can conduct fiscal policy which uses taxes and government spending to control the economy. An expansionary fiscal policy increases government spending or decreases taxes to increase aggregate demand, and that stimulate the economy, and the economic activities will stabilize.

Monetary policy is used by the Fed to control the economy.