Fiscal policy, often deployed by governments during economic downturns, plays a pivotal role in mitigating the adverse effects of recessions. By adjusting government spending and taxation, fiscal policy aims to stimulate aggregate demand, promote economic growth, and alleviate the negative impact of recessions on individuals, businesses, and the overall economy. During a recession, governments may implement expansionary fiscal measures, such as increasing government spending on infrastructure projects, unemployment benefits, and social welfare programs, while simultaneously reducing taxes or providing tax credits to households and businesses. These initiatives inject additional money into the economy, bolstering consumer and business spending, creating jobs, and fostering confidence. By strategically utilizing fiscal policy tools, policymakers can help stabilize the economy, support vulnerable populations, and pave the way for a sustainable recovery from recessionary pressures.
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