📚 Learning Guide
Fiscal Policy in Recessions
easy

What is a common fiscal policy tool used during a recession to stimulate economic growth?

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Learning Path
Learning Path

Question & Answer
1
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2
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3
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4
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Choose the Best Answer

A

Increase in taxes

B

Decrease in government spending

C

Increase in government spending

D

Decrease in interest rates

Understanding the Answer

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Answer

A common fiscal policy tool used during a recession is government spending. When the economy is struggling, people may lose jobs and spend less money, which can make the situation worse. To help improve the economy, the government can increase its spending on things like infrastructure projects, schools, or healthcare. For example, if the government builds new roads, it creates jobs for construction workers and also helps businesses transport goods more easily. This increased spending can lead to more money circulating in the economy, helping to boost growth and reduce unemployment.

Detailed Explanation

Increasing government spending helps create jobs and boosts demand. Other options are incorrect because Some think raising taxes helps the economy; Many believe cutting government spending is a good idea.

Key Concepts

taxation
Topic

Fiscal Policy in Recessions

Difficulty

easy level question

Cognitive Level

understand

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