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Do you think the government's role should include helping the economy pull out of a recession? Defend your answer
Do you think the government's role should include helping the economy pull out of a recession? Defend your answer.
Expert Solution
Yes government role should include helping the economy pull out of a recession. as government use fiscal policy to correct the recessionary and inflationary conditions. government already implement a fiscal polcy that includes tax regulation and public borrowings. government prepare an annual budget that includes their annual expected revenue and expenditure to be received and incurred while doing regular activities. government collect tax revenue that is used to meet the annual expenditure related to project and policies. but some time economy experiences recession that is not a good for economic development and growth. so government should set aside a amount of money that might be used to cover the recessionary gap in which public expenditure should be increased and government should include tax reduction directly and indirectly. tax reduction on individual income might give an extra income in the hand of consumer to spend and help to increae the production process that ultimately increase the AD and AS which important one to improve the recessionary situation.
During this time when economy is experiencing recession due to covid, government has already taken initiative to provide allowance to public in different countries, different government in different countries have given morotorium facilities to borrower so that whatever income they have would be used to maintain aggregate demand and supply. government have created funds to support the recessionary condition that would help the economy to pull out of recession condition.
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