Which of the following would most likely cause a recession?

Question

Which of the following would most likely cause a recession?

A. Government spending increases and taxes are reduced.

B. Imports rise and exports fall.

C. An increase in consumer confidence and expenditures spending rises.

D. Interest rates fall and investment spending increases.

Answer 1

B. imports rise and exports fall.

A. reducing taxes would actually bring in more money for the government and has proved true several times when taxes are reduced.

C. It would help the economy to have people spending more

D. not really sure.

the answer is B

Answer 2

B...same reasons as junkette, ^^ junkette explained it well. ^^

Answer 3

A recession is 2 straight quarters of negative GDP growth...

GDP = C + G + I +X

c = consumption

g = government spending

i = investments

x = export - import

scenarios

a) higher G, higher C, therefore higher GDP

b) if u import more then you export, X will fall, therefore GDP will fall

c) higher C lead to higher GDP

d) interest rate falls lead to higher investment (=I), therefore GDP goes higher

so the answer is B. In all other cases, GDP is likely to increase.

Answer 4

B.