📚 Learning Guide
Fiscal Policy in Recessions
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Arrange the following steps in the correct order for implementing fiscal policy during a recession: A) Increase government spending, B) Analyze economic conditions, C) Decrease taxes, D) Evaluate the effects of the policy.

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Choose the Best Answer

A

B → A → C → D

B

B → C → A → D

C

A → B → D → C

D

C → A → B → D

Understanding the Answer

Let's break down why this is correct

Answer

To implement fiscal policy during a recession, the first step is to analyze economic conditions. This means looking at data to understand how the economy is doing, such as unemployment rates and consumer spending. After understanding the situation, the next step is to increase government spending and decrease taxes to stimulate the economy. By doing this, the government can encourage people to spend more money, which helps businesses and creates jobs. Finally, after these changes are made, it is important to evaluate the effects of the policy to see if it is helping the economy recover.

Detailed Explanation

First, we need to understand the economy by analyzing conditions. Other options are incorrect because This option suggests we lower taxes before spending; This choice puts spending before understanding the economy.

Key Concepts

Fiscal Policy
Economic Recession
Aggregate Demand
Topic

Fiscal Policy in Recessions

Difficulty

medium level question

Cognitive Level

understand

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