Question

To stimulate the economy during a recession liberals will normally seek to ___________ government spending (g) for social needs and infrastructure.

Answer 1

Expansionary fiscal policy is most suitable when an economy is in slump and producing below its possible GDP. Contractionary fiscal policy reduces the level of aggregate demand, either through cuts in state spending or growths in taxes.

Does an increase in government spending increase GDP?

The mix of interests doesn't affect the level of GDP, as long as the full amount paid on them doesn't change. Total spending—and thus the equilibrium level of GDP—declines.

Rental agents, landlords, and property management companies can thrive during a recession when leasing is probably to become a more attractive option, if not the only one available.

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