📚 Learning Guide
Recession and Fiscal Policy Actions
easy

What is one of the main tools of fiscal policy that the government can use to combat a recession?

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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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Choose the Best Answer

A

Increasing taxes

B

Cutting government spending

C

Increasing government spending

D

Reducing interest rates

Understanding the Answer

Let's break down why this is correct

Answer

One of the main tools of fiscal policy that the government uses to combat a recession is increasing government spending. When the economy is struggling, people often have less money to spend, which can lead to businesses making less profit and possibly laying off workers. By increasing spending on things like infrastructure projects, the government creates jobs and puts money into the hands of people who will spend it. For example, if the government builds new roads or schools, workers are hired for these projects, and they will then spend their earnings on food, clothing, and other goods. This boost in spending helps to stimulate the economy and can lead to recovery from the recession.

Detailed Explanation

When the government spends more money, it helps create jobs and boosts the economy. Other options are incorrect because Some might think raising taxes helps the government, but it actually takes money away from people; Many believe that cutting spending saves money, but it can lead to fewer jobs and less money in the economy.

Key Concepts

fiscal policy
Topic

Recession and Fiscal Policy Actions

Difficulty

easy level question

Cognitive Level

understand

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