[Solved] Which among the following steps is most likely to be taken at the time of an economic recession?

Q3. Which among the following steps is most likely to be taken at the time of an economic recession?

A. Cut in tax rates accompanied by increase in interest rate

B. Increase in expenditure on public projects

C. Increase in tax rates accompanied by reduction of interest rate

D. Reduction of expenditure on public projects

Answer: B

A recession is a macroeconomic term that refers to a significant decline in general economic activity in a designated region. It had been typically recognized as two consecutive quarters of economic decline, as reflected by GDP in conjunction with monthly indicators such as a rise in unemployment.

• Effects of Recession

Budget Deficit

• Company’s going out of business

• Declining Real Incomes

• Fall in Exchange Rate

• Falling Asset Prices

• Low-Interest Rates

• Lower Levels of Inflation

• Unemployment

Solutions to an Economic Recession

• Reduce Taxes

• Increase in Government Spending

• Quantitative Easing

• Reduce Interest Rates