📚 Learning Guide
Recession and Fiscal Policy Actions
easy

What is a common fiscal policy action taken by the government during a recession?

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
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4
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Choose the Best Answer

A

Increase taxes

B

Decrease government spending

C

Increase government spending

D

Raise interest rates

Understanding the Answer

Let's break down why this is correct

Answer

During a recession, a common fiscal policy action taken by the government is to increase public spending. This means the government spends more money on things like building roads, improving schools, or funding healthcare. The idea behind this is to create jobs and boost the economy, as more people working means more money is circulating. For example, if the government decides to build a new highway, it hires construction workers and buys materials, which helps those workers earn money and spend it in their communities. This increased spending can help lift the economy out of a recession by encouraging more business activity and consumer confidence.

Detailed Explanation

During a recession, people spend less money. Other options are incorrect because Some think raising taxes helps the government; It's a common belief that cutting spending saves money.

Key Concepts

recession
Topic

Recession and Fiscal Policy Actions

Difficulty

easy level question

Cognitive Level

understand

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