Which of the following fiscal policy actions would MOST likely be used to stimulate an economy experiencing a severe recession?

Which of the following fiscal policy actions

Multiple choice — select the best answer

ARaising the reserve requirement for commercial banks
BDecreasing income tax rates and increasing government spending
CSelling Treasury securities through open market operations
DIncreasing income tax rates and reducing government spending

✓ Correct answer: B. Decreasing income tax rates and increasing government spending Expansionary fiscal policy — implemented by Congress and the President — involves cutting taxes to boost disposable income and increasing government spending to inject demand into a sluggish economy.

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Topic: Uniform Investment Adviser Law

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Which of the following fiscal policy actions would MOST likely be used to stimulate an economy experiencing a severe recession?

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