Immediate Monetary Policy Boost

Steps:

• Identify deflationary downturn as falling prices and low demand needing quick stimulus.
• Classify policies: fiscal (A, C, D) vs. monetary (B).
• Assess immediacy: monetary policy acts fastest through financial channels.
• Choose option enabling rapid credit expansion.

Why B is correct:

• Assisting banks increases liquidity, enabling immediate lending per the money multiplier effect, boosting money supply and aggregate demand.

Why the others are wrong:

• A: Raises surplus by cutting spending or taxes, contracting economy further.
• C: Infrastructure investments require planning, delaying impact for years.
• D: Tax shift encourages consumption but needs legislative changes, slowing rollout.

Final answer: B