Which of the following is a procyclical policy?
A) Tax cuts are made during an economic expansion.
B) Tax cuts are made during a recession.
C) Government purchases are increased during a recession.
D) Government purchases are decreased during an expansion.

Question

Quizplus · Accepted Answer

Procyclical policies are those that amplify economic or business cycle fluctuations. Tax cuts during an economic expansion are procyclical because they can further stimulate an already growing economy.

Which of the Following Is a Procyclical Policy