Question

Suppose that the economy is suffering from a recession (or type of economic downturn). Businesses are closing, and people are losing their jobs. In 1 or 2 sentences, list two fiscal policy actions that could help the economy to recover faster.

Answer 1

Answer:

Tax Reduction

Increased federal spending

Explanation:

In a recessionary economy, the government must act to stimulate economic relations. For this, the Government can use fiscal policy on two fronts:

Increased federal spending: Government is a major economic agent and its presence in the economy depends on the composition of public spending. In a recessionary scenario, rising government spending will stimulate the economy's output as the government is a major consumer in many areas.

Tax Reduction: The government can lower corporate taxes to reduce the cost of products. Thus, companies will be able to offer goods at a lower cost and this tends to encourage consumers to buy.

Answer 2

Two things that could help this economy is introducing a new, profitable field into the professional realm, and increased (good trading, not worthless trading) trading with other countries.