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

Which among the following steps is most likely to be taken at the time…

Answer

(a) In a recession, policy is usually expansionary: taxes may be cut, but interest rates are generally reduced, not increased. Verdict: Incorrect.
(b) Governments often increase expenditure on public projects to raise demand, employment, and investment during recession. Verdict: Correct.
(c) Higher taxes reduce disposable income and demand, which is opposite to what is usually needed in a recession, even if interest rates are cut. Verdict: Incorrect.
(d) Reducing public expenditure is contractionary and can worsen recessionary conditions. Verdict: Incorrect.