Which of the following policy combinations is most likely to cure a severe recession?

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What fiscal policy actions would combat the recession?
Which of the following combinations of fiscal and monetary policies would be most effective in reducing inflation?
Is monetary or fiscal policy more effective?
Which of the following policy combinations would cause a rise in the government budget deficit?

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What fiscal policy actions would combat the recession?

During a recession, the government may lower tax rates or increase spending to encourage demand and spur economic activity. Conversely, to combat inflation, it may raise rates or cut spending to cool down the economy.

Which of the following combinations of fiscal and monetary policies would be most effective in reducing inflation?

Option D) is correct: Monetary policy: sell government securities; Fiscal policy: decrease the federal budget deficit. In an inflationary situation, the money supply should be reduced, and the government should reduce its expenditure and increase taxes.

Is monetary or fiscal policy more effective?

In comparing the two, fiscal policy generally has a greater impact on consumers than monetary policy, as it can lead to increased employment and income. By increasing taxes, governments pull money out of the economy and slow business activity.

Which of the following policy combinations would cause a rise in the government budget deficit?

Contractionary policy is characterized by decreased government spending or increased taxes to combat rising inflation. Expansionary policy leads to higher budget deficits, and contractionary policy reduces deficits.