Question

Read a passage from a speech given by President Barack Obama.

Because of this plan, families who are struggling to pay tuition costs will receive a $2,500 tax credit . . . And Americans who have lost their jobs in this recession will be able to receive extended unemployment benefits.

–President Barack Obama,
February 4, 2009

Which statement best explains this passage?

It describes government measures to stimulate demand and bring about a recovery.
It describes government measures to increase production and bring about a depression.
It describes a shift in government policies during a trough on the business cycle.
It describes a shift in government policies during a peak on the business cycle.

Answer 1

It describes government measures to stimulate demand and bring about a recovery.

These are expansionary fiscal policies (tax credits and extended unemployment benefits) used during a recession to raise aggregate demand and shorten the downturn.