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Suppose the economy is slumping into recession and needs a fiscal policy boost. Voters, however, are opposed to larger federal deficits. What should policy makers do?

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Solution Summary

A study of recession is embodied.

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5). Suppose the economy is slumping into recession and needs a fiscal policy boost. Voters, however, are opposed to larger federal deficits. What should policy makers do?

Key terms:

Recession: the economy is in a recession when total output falls during two consecutives Quarters.
Federal Deficits: Excess of government spending over taxes collected for a year.
Fiscal policy: Fiscal policy is the decision made by the government to change it level of spending and taxation.

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