If a government wants to boost economic growth in a recession, which measure is it likely to take?

Question

Question

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SSC JE Civil 06 Jun 2024 Shift 3 Official Paper - 1

Answer 1

The correct answer is Increase public spending

Key Points

Increase public spending is a common measure taken by governments to boost economic growth during a recession.
By increasing public spending, the government injects more money into the economy, which can stimulate demand and create jobs.
This can include spending on infrastructure projects, social programs, and other public services that can have immediate and long-term economic benefits.
Increased public spending can help counteract the reduced private sector spending that typically occurs during a recession.

Additional Information

During a recession, consumer and business spending often decrease, leading to lower economic output and higher unemployment.
Governments may also implement monetary policies, such as reducing interest rates, to complement increased public spending and stimulate economic growth.
Fiscal policies, like increased public spending, are critical tools for governments to manage economic cycles and promote stability.
However, it is important for governments to balance short-term economic boosts with long-term fiscal responsibility to avoid excessive debt.