📚 Learning Guide
Recession and Fiscal Policy Actions
easy

What is one primary action a government can take to combat a recession through fiscal policy?

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Learning Path
Learning Path

Question & Answer
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Choose the Best Answer

A

Increase government spending

B

Decrease taxes

C

Reduce interest rates

D

All of the above

Understanding the Answer

Let's break down why this is correct

Answer

One primary action a government can take to combat a recession through fiscal policy is to increase public spending. When the government spends more money on things like building roads, schools, or hospitals, it creates jobs and puts money into people's hands. This extra money helps families buy things they need, which boosts businesses and encourages them to hire more workers. For example, if the government decides to invest in a new highway, it not only employs construction workers but also helps local shops and restaurants thrive as more people travel to the area. By increasing spending, the government can help the economy recover and grow again.

Detailed Explanation

When the government spends more money, it helps create jobs and boosts the economy. Other options are incorrect because Some think lowering taxes will always help, but it might not be enough during a recession; While lower interest rates can help, they are not a direct action of fiscal policy.

Key Concepts

government spending
Topic

Recession and Fiscal Policy Actions

Difficulty

easy level question

Cognitive Level

understand

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