Question

If the economy is in a recession and prices are relatively stable, then the discretionary fiscal policy or policies that would most likely be recommended to correct this macroeconomic problem would be

Answer 1

The government can decide to increase their spending in an attempt to boost private consumption and investment, or the government can decide to lower taxes which usually does increase private consumption and investment.

The government can also decide to carry out a combination of both policies, but the problem with that dual approach is that it will increase the government's deficit and national debt.