Under what scenario could fiscal policy make a recession even worse?

select one:

a. if tax cuts are not evenly distributed across income groups.

b. if the multiplier is bigger than 1

c. if there is no crowding out of private spending

d. if deficit financed fiscal policy increases the national debt to the point it scares investors away and decreases spender confidence

The correct answer is letter "A": If tax cuts are not evenly distributed across income groups.

Explanation:

Fiscal policy refers to the combined governmental decisions regarding a country's taxing and spending. The term fiscal policy is associated with British economist John Maynard Keynes (1883-1946) who believed governments should influence macroeconomic productivity levels. Though, it could be a trap if it is not allocated correctly among different income groups. Economies such as Brazil, for instance, have allocated higher taxes for low-income people creating economic disparity.

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