Question

If the federal government increased spending then you could expect to see A recession A decrease...

  1. If the federal government increased spending then you could expect to see

A recession

A decrease in interest rates

An increase in interest rates

A decrease in the nation debt

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Option C.

  • Federal government usually uses expansionary fiscal policy to combat recession in an economy. It does so by increasing its spending on the ecomomy and people and by cutting the taxes.
  • When it increases the spending, there is a crowding out effect because the government needs to borrow more money to finance it's expenses, which increases the demand for money and further leads to an increase in the interest rates.
Add a comment
Know the answer?
Add Answer to:
If the federal government increased spending then you could expect to see A recession A decrease...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT