Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Increase aggregate demand to stimulate economic growth
B
Decrease inflation rates to stabilize prices
C
Reduce unemployment by cutting taxes
D
Encourage savings to improve future investments
Understanding the Answer
Let's break down why this is correct
Answer
When a government increases its spending during a recession, the main goal is to stimulate the economy. This means that by spending more money, the government hopes to create jobs and increase demand for goods and services. For example, if the government builds new roads or schools, it not only employs workers but also encourages businesses to supply materials and services for these projects. As people earn money from these jobs, they will spend more, which helps boost overall economic activity. This process helps lift the economy out of a recession by making sure more people have money to spend and businesses can grow.
Detailed Explanation
When the government spends more money, it helps people and businesses buy things. Other options are incorrect because Some might think that spending more will lower prices; It's a common belief that cutting taxes is the best way to reduce unemployment.
Key Concepts
Fiscal Policy
Aggregate Demand
Economic Growth
Topic
Fiscal Policy in Recessions
Difficulty
easy level question
Cognitive Level
understand
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