Respuesta :
Possible fiscal policy solutions to close this recessionary gap would include increasing government purchases or decreasing taxes.
What is a fiscal policy?
The phrase "fiscal policy" refers to how the government utilizes spending and taxing to affect the economy. Fiscal policy is widely used by governments to encourage robust, long-term growth and to lower poverty. As governments moved to stabilize financial institutions, encourage growth, and lessen the crisis' impact on vulnerable populations, the function and goals of fiscal policy came into greater focus. The leaders of the Group of 20 industrialized and emerging market countries declared that they were pursuing "unprecedented and concerted budgetary expansion" in the communiqué that followed their summit in London in April 2009.
In order to stimulate the economy, for instance, governments can lower taxes and increase expenditure; generally, however, they invest in social programs and infrastructure improvements that create revenue and jobs. Alternatively, a government may elect to reduce expenditure while increasing taxes if the economy is doing well.
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