If a country is trying to recover from a recent recession,it is unlikely the central bank will decide to ________ because it would ________.
A)increase taxes;increase aggregate demand
B)institute a tax cut;increase aggregate demand
C)raise interest rates;decrease aggregate demand
D)lower interest rates;decrease aggregate demand
E)raise interest rates;increase aggregate demand

Question

Quizplus · Accepted Answer

Raising interest rates decreases aggregate demand by making it more expensive to borrow money. This would be counterproductive to the goal of recovering from a recession, which requires increasing aggregate demand.

If a Country Is Trying to Recover from a Recent