1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a....

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1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a. an increase in ta

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Answer 1

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1. An increase in taxes and/or decrease in government spending.

2. Makes the aggregate expenditures function flatter and lowers the size of multiplier.

3. The tendency of tax collection to fall as the economy moves into a recession.

4. Deficit, if the economy is below full employment and the actual budget is balanced.

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