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?

Lower taxes and decrease spending

Lower taxes and increase spending

Raise taxes and decrease spending

Raise taxes and increase spending

Answer 1

The answer is: Lower taxes and increase spending

Step-by-step explanation:

When the government lowers taxes it is increasing the consumption power of the people. Private consumption accounts for approximately 71% of the GDP. When taxes are lowered, people have more money, so they spend more and increase consumption.

When the government increases their spending they are also putting money on the hands of the consumers. The government doesn't spend money by burning it, they purchase goods or services or pay salaries. It's a circle, that always comes back. If consumers have more disposable money, then they can buy more things and increase consumption.

Answer 2

"Lower taxes and increase spending" would be the one fiscal policy among the following choices given in the question that the federal government would most likely take to help the economy grow. The correct option among all the options that are given in the question is the second option. I hope the answer helps you.