ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If the economy begins to fall into a recession, one would expect Congress and the president to conduct: expansionary fiscal policy.

Detailed explanation-2: -Summary. Expansionary fiscal policy increases the level of aggregate demand, either through increases in government spending or through reductions in taxes. Expansionary fiscal policy is most appropriate when an economy is in recession and producing below its potential GDP.

Detailed explanation-3: -What Is Fiscal Policy? Fiscal policy refers to the use of government spending and tax policies to influence economic conditions, especially macroeconomic conditions. These include aggregate demand for goods and services, employment, inflation, and economic growth.

Detailed explanation-4: -Fiscal Policy When the country is in a recession, the appropriate policy is to increase spending, reduce taxes, or both. Such expansionary actions will put more money in the hands of businesses and consumers, encouraging businesses to expand and consumers to buy more goods and services.