What are the positives and negatives of this approach

Reference no: EM133623938

Problem

Recessions are caused by decreases in total spending. To get out of a recession, total spending needs to stabilize and then increase.

A. One approach to stabilizing and increasing total spending during a recession is to have the government step in and start spending more money. What are the positives and negatives of this approach?

B. Another approach to stabilizing and increasing total spending during a recession is to allow the markets to recalibrate and reach a new equilibrium on their own, without government intervention. What are the positives and negatives of this approach?

Reference no: EM133623938

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