Suppose that the economy is in the midst of a recession. Which of the following policies would be consistent?

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Suppose that the economy is in the midst of a recession. Which of the following policies would be consistent with the active fiscal policy?

A) A congressional proposal to incur a Federal surplus to be used for the retirement of public debt.
B)A reduction in agricultural subsidies and veterans benefits.
C) A postponement of a highway construction program
D) A reduction in Federal tax rates on personal and corporate income

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This entry was posted on Friday, May 22nd, 2009 at 2:04 am and is filed under Debt Freedom. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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3 Responses to “Suppose that the economy is in the midst of a recession. Which of the following policies would be consistent?”

  1. UncommonSense Says:
    May 22nd, 2009 at 7:37 pm

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    D)

  2. shatteredfreak Says:
    May 24th, 2009 at 2:36 pm

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    the answer is D.
    with a fiscal policy during recession, you reduce taxes and increase government spending.
    i hope this helps

  3. Jurij-EU Says:
    May 27th, 2009 at 6:36 am

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    “D” is right one - it will increase disposable income thus supporting demand and will protect aggregate supply from falling thus keeping GDP higher than it would be without tax-cut.