Question

Economists warn that the nation is slipping into a recession. Which fiscal policies will the federal government most likely take to help the economy grow? (4 points) Select one: a. Lower taxes and decrease spending b. Lower taxes and increase spending c. Raise taxes and decrease spending d. Raise taxes and increase spending

Answer 1

Economists warn that the nation is slipping into a recession.The following fiscal policy might be considered by the Federal government:

b. lower taxes and increase spending

Answer 2

A recession is a period of economic decline, were the GDP shrinks, unemployment rises up, wages get stagnated and retail sales drop.

What the Federal Government normally do is apply Expansionary fiscal policies, to help elevate the demand levels, like increasing government spending and reducing taxes.

Thereby the answer is (b)