Answer to Question #137205 in Macroeconomics for December

Question

44. In the first quarter of 2020, the economy of South Africa entered a recession. Which of the following best described what you would advice policymakers to do in order to move the economy out of a recession without causing an increase in inflation?

[1] to apply supply-side policy that will increase aggregate supply.

[2] to respond with demand management policy that will increase aggregate supply.

[3] to implement contractionary monetary policy and expansionary fiscal policy.

[4] do nothing as any response will push the economy even deeper into recession.

Answer 1

(3) To implement contractionary monetary policy and expansionary fiscal policy.