QAEconomics › During a recession, what is one way governments try to encourage growth?
Q

During a recession, what is one way governments try to encourage growth?

1) by increasing unemployment benefits

2) by stopping government spending

3) by requiring firms to maintain production

4) by eliminating all tax breaks

A

Answer: By increasing unemployment benefits.

When a country is going through a recession, the government utilizes the “fiscal policy” which dictates that when a country is in recession, more money should be spent. The best option is to introduce or encourage unemployment benefits.

This puts more money in the hands of business owners and their customers, which has the ripple effect of encouraging demand and helping businesses to expand.

1 year ago
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