Answer:
Tax Reduction
Increased federal spending
Explanation:
In a recessionary economy, the government must act to stimulate economic relations. For this, the Government can use fiscal policy on two fronts:
Increased federal spending: Government is a major economic agent and its presence in the economy depends on the composition of public spending. In a recessionary scenario, rising government spending will stimulate the economy's output as the government is a major consumer in many areas.
Tax Reduction: The government can lower corporate taxes to reduce the cost of products. Thus, companies will be able to offer goods at a lower cost and this tends to encourage consumers to buy.
