Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Decreasing unemployment
B
Increasing overall demand
C
Lowering inflation
D
Reducing transfer payments
Understanding the Answer
Let's break down why this is correct
Answer
Decreasing taxes allows people to keep more of their money, which is called disposable income. Similarly, increasing government spending puts more money into the economy, which can help stimulate growth and create jobs. When the government spends more, it can lead to more business activity and increased demand for goods and services. For example, if the government builds a new school, it not only creates jobs for construction workers but also provides a place for children to learn, benefiting the community. So, increasing government spending is to stimulating economic growth as decreasing taxes is to increasing disposable income.
Detailed Explanation
When the government spends more money, it helps people buy more things. Other options are incorrect because Some might think that government spending directly lowers unemployment; People may believe that more spending lowers prices.
Key Concepts
Fiscal Policy Actions
Recessionary Gap
Aggregate Demand
Topic
Recession and Fiscal Policy Actions
Difficulty
medium level question
Cognitive Level
understand
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