Question

How can the government provide the best stimulus to the circular flow of the economy?

Answer 1

Answer:

The government can accomplish economic stimulus by lowering interest rates, or by increasing government spending, utilizing fiscal and monetary policy, etc.

Explanation:

Economic stimulus is an attempt that a government or government agencies make to stimulate the financial economy of a country.

The government can accomplish economic stimulus by lowering interest rates, or by increasing government spending, utilizing fiscal and monetary policy, etc.

A British economist, John Maynard Keynes, argues that during persistent high unemployment, governments should lower their spending so that the economy can be stimulated.

Answer 2

Despite decades of repeated failure, President Obama and Congress continue to promote the myth that government can spend its way out of recession. Heritage Foundation economic policy expert Brian Riedl dispels the stimulus myth, lays out the evidence that government spending does not end recessions--and presents the evidence for what does end recessions. Hint: It's not another "stimulus package."