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

The government could decrease income tax so people have more disposable income to spend on goods and services and therefore increase AD. They could also increase government expenditure to increase AD.
(since AD=C+I+G+(X-M))

Answer 2

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