Question

3. What policy would you use, as the government, for when the country is in a recession? Why? What about when the country is in a boom? Why?

Answer 1

Answer:

Using Fiscal policy is the best way to fight the recession of the country.

Explanation:

It involves the acts of government like, increasing the government spending, making the interest rate as low as possible and encouraging the investors.

This tactics of applying the fiscal policy helps the country in increasing the GDP and fight against the recession.

Government should apply monetary policy when the economy of the country is in boom because it may cause inflation.

Privatization and reduction in money supply helps in controlling the inflation.