Question

What should the government’s fiscal policy be during recession? During a recession, the government should ideally follow a/an _____ policy.
- contractionary
- expansionary
- surplus
This would bring about an increase in output , leading to reduced ____.
- production
- spending
-unemployment

Answer 1

Answer:

1. The correct answer is expansionary

2. The correct answer is unemployment

Explanation:

1. During a recession, the government should use an expansionary policy according to classic Keynesian economics. The aim is to stimulate the economy, increase the supply of money for investment and even increase government spending in key infrastructure areas.

2. With such a policy, the aim would be to increase industrial production and market spending. If a stimulus is given to businesses and people start spending more, it can have a direct impact on the reduction of unemployment.