Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Reducing government spending
B
Increasing taxes
C
Increasing government spending
D
Implementing austerity measures
Understanding the Answer
Let's break down why this is correct
Answer
According to Keynesian economics, the most effective fiscal policy measure during an economic recession is increased government spending. This approach works because when the economy is struggling, people often have less money to spend, which can lead to lower demand for goods and services. By the government stepping in and spending more, it can create jobs and stimulate demand, helping to boost the economy. For example, if the government invests in building new roads, it not only provides work for construction workers but also improves infrastructure, making it easier for businesses to operate. This combination of job creation and improved services can help pull the economy out of a recession.
Detailed Explanation
When the economy is struggling, spending more money can help. Other options are incorrect because Some think cutting spending saves money, but it can hurt the economy; Many believe higher taxes help the government, but they can take money away from people.
Key Concepts
economic recession
Keynesian economics
Topic
Fiscal Policy in Recessions
Difficulty
medium level question
Cognitive Level
understand
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