If the Economy Is in a Recession and Prices Are

question 145

Multiple Choice

If the economy is in a recession and prices are relatively stable, then the discretionary fiscal policy or policies that would most likely be recommended to correct this macroeconomic problem would be:

• A)increased government spending or increased taxation, or a combination of the two actions.
• B)increased government spending or decreased taxation, or a combination of the two actions.
• C)increased government spending or increased taxation, but not a combination of the two actions.
• D)decreased government spending or decreased taxation, or a combination of the two actions.

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Definitions:

Debt

Debt represents money borrowed by one party from another under the condition that it is to be repaid, usually with interest.

Basis of Stock

The original value of an asset for tax purposes, usually the purchase price, which is used to calculate capital gains or losses when the stock is sold.

Contributed Property

Property or assets given to a partnership or corporation by an owner or shareholder, often impacting the basis of the investment.

Shareholder

An individual or entity that owns shares in a corporation and therefore has ownership interest in the company.