Respuesta :
The combinations of fiscal and monetary policies will correct a severe recession are the purchase of government securities by the Fed coupled with a tax reduction.
About Monetary policy
Monetary policy is the manipulation of the money supply and interest rates to stabilize or stimulate the economy. In the modern economy, monetary policy is a more powerful mechanism for dealing with recessions and reducing unemployment than fiscal policy.
Monetary policy is executed by changing the money supply first, to manipulate interest rates. Because interest rates affect nearly all the demand for goods and services as well as investment, their effect will be large and pervasive in stimulating or reducing economic activity. The demand for the money supply depends on the interest rate.
The main concept of monetary policy is that a lower interest rate will lead to higher consumption and investment, thereby increasing the level of aggregate demand.
About Fiscal economic policy
Fiscal policy focuses on the state budget and taxes. This policy is closely related to macroeconomics because the government has the opportunity to increase aggregate demand through fiscal economic policies.
Changes can be grouped into 2:
a. increase aggregate demand indirectly by lowering taxes so that consumers have greater after-tax income to spend on other goods and services, and
b. increase aggregate demand by buying goods and services.
The first change involves reducing government revenue, while the second involves increasing state spending. The state budget deficit is revenue minus expenditure, so that both forms of fiscal policy can increase the state budget deficit.
The state budget deficit can result in a number of economic problems such as inflation, so that initiatives to implement fiscal policy are limited with these considerations in mind.
If the economy is in trouble, one of the decisions of policy makers is to increase state spending.
Your question is incomplete but most probably your full question was:
If the economy was experiencing a severe recession, which of the following combinations of monetary and fiscal policy actions would be most appropriate?
a. the sale of government securities by the Fed coupled with an increase in the level of government spending
b. the purchase of government securities by the Fed coupled with a decrease in the level of government spending
c. the purchase of government securities by the Fed coupled with a tax reduction
d. a decrease in the reserve requirement coupled with an increase in taxes
e. an increase in the reserve requirement coupled with a tax reduction
f. the purchase of government securities by the Fed coupled with a tax increase
Learn more about fiscal and monetary policy at https://brainly.com/question/17439046.
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