Which Is the MOST Effective Fiscal Policy to Fight a Recession

question 18

Multiple Choice

Which 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:

Proxy

Grant of authority by a shareholder allowing for another individual to vote his or her shares.

Preferred Stock

A type of corporate share that is prioritized over common stock in terms of asset and income claims, usually with dividends paid out to these shareholders first.

Bankruptcy

The legal process through which individuals or businesses unable to pay their debts can seek relief from some or all of their liabilities.

Equity

The ownership interest of shareholders in a corporation, represented by their shares.