The Two Most Severe Recessions of the Post-World War II

question 46

Multiple Choice

The two most severe recessions of the post-World War II era occurred in 1981-1982 and 2008-2009. The policy responses to the two recessions were

• A)very similar; expansionary fiscal policy promoted a strong recovery in both cases
• B)very similar, but the recovery was nonetheless weak in both cases
• C)dramatically different; tax rates were cut and monetary policy was restrictive during the earlier recession, while government spending was increased sharply and monetary policy highly expansionary during the more recent recession
• D)dramatically different; tax rates were increased and monetary policy was highly expansionary during the earlier recession, while tax rates were cut and monetary policy was restrictive during the more recent recession

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Definitions:

Material

In financial and accounting contexts, refers to information or an item that could influence the decision-making process of users of financial statements.

Omission

An oversight or failure to include something, often resulting in an incomplete set of information or accounting records.

Misstatement

A false or inaccurate statement or entry, often in financial reporting or documentation.

Historical Cost

The original monetary value of an asset, reflecting its cost at the time of acquisition, without adjustments for inflation.