Question

Which statements best describe how governments respond to changes in the business cycle? Check all that apply.

Answer 1

Governments should reduce their expenditures to fulfill the requirements of needy people. They must spend their money with great care.

Business cycle relates with economic activities. It relates with positive and negative economies. Growth rate is related to business cycle. Government manipulates interest rates and forms a proper budget and allot this budget to every institution.

Answer 2

The correct options for the given question are:

" the government reduces spending"

"the government changes its policies"

once a change in a business cycle takes place, the first action of the government is to reduce spending to control the damage.

The next step is to make the necessary changes in the financial agenda of the government to make sure that a recovery is possible from the financial downturn