Question

Which government sector has the ability to respond countercyclically to the economy? state only. federal only. local only. federal, state, and local?

Answer 1

The correct answer is federal only

The federal government is the only one who has the power to respond to such situations. Countercyclical states are when the opposite of what is going to the economy is happening in another field. For example, unemployment is countercyclical because the slower the economy, the higher the unemployment. The federal government is the only one that can respond to this.