Which of the Following Is the Most Effective Fiscal Policy

question 103

Multiple Choice

Which of the following is the most effective fiscal policy to fight a recession if people react to uncertainty by saving all additional money that they earn or receive?

• A) a tax cut
• B) a tax rebate
• C) an increase in government spending
• D) a do-nothing strategy that relies on automatic stabilizers.

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Definitions:

Liability Account

An accounting record that captures the amounts a company owes to creditors or suppliers.

Asset Account

A ledger account that tracks the value of an entity's resources or items of value owned, such as cash, inventory, equipment, and real estate.

Credit Customer

A credit customer is a customer who purchases goods or services on credit, agreeing to pay the seller at a later date as specified by the credit terms.

Services

Activities or benefits provided by one party to another, often as a component of economic transactions where physical goods are not exchanged.