QuestionJuly 30, 2025

Fiscal policies of state and local government are frequently pro-cyclical in that they __ the economy. worsen cause no changes in improve correct

Fiscal policies of state and local government are frequently pro-cyclical in that they __ the economy. worsen cause no changes in improve correct
Fiscal policies of state and local government are frequently pro-cyclical in that they __ the economy.
worsen
cause no changes in
improve
correct

Solution
4.6(317 votes)

Answer

worsen Explanation 1. Identify the nature of pro-cyclical fiscal policies Pro-cyclical fiscal policies amplify economic fluctuations. During economic booms, they increase spending or cut taxes, and during recessions, they decrease spending or raise taxes. 2. Determine the effect on the economy By amplifying economic fluctuations, pro-cyclical policies worsen the economy during downturns and potentially overheat it during upturns.

Explanation

1. Identify the nature of pro-cyclical fiscal policies<br /> Pro-cyclical fiscal policies amplify economic fluctuations. During economic booms, they increase spending or cut taxes, and during recessions, they decrease spending or raise taxes.<br /><br />2. Determine the effect on the economy<br /> By amplifying economic fluctuations, pro-cyclical policies worsen the economy during downturns and potentially overheat it during upturns.
Click to rate:

Similar Questions