Final answer:
The action not taken by the government to stimulate the economy during the Great Recession of 2007-09 was a sharp increase in the natural rate of unemployment. Governments tend to implement expansionary fiscal and monetary policies during recessions to encourage economic growth and reduce unemployment. Therefore, the correct option is B.
Step-by-step explanation:
The government actions taken to stimulate the economy during the Great Recession of 2007-09 included a significant reduction of interest rates to nearly zero, an increase in the deficit-spending of the government, and a large increase in transfer payments. However, the action that was not taken to stimulate the economy was b. a sharp increase in the natural rate of unemployment.
During a recession, unemployment tends to rise due to the slowdown in economic activity, hence it is not a measure taken by the government to stimulate the economy but rather an outcome of the recession. Instead, the strategies used were aimed at decreasing unemployment and stimulating economic growth through expansionary fiscal policy, which involved both tax cuts and spending increases, and expansionary monetary policy. An example of such a policy was the $830 billion expansionary policy passed by the Obama administration and Congress in early 2009.