If the government is required to balance the budget and the economy falls into a recession, which of the actions is a feasible policy response? increase government spending to stimulate the economy cut spending equal to the reduction in tax revenue cut taxes to encourage consumer spending invest in infrastructure What is a likely consequence of this policy? Unemployment falls due to the economic stimulus. The negative consequences of the recession are magnified. There is hyperinflation due to an increase in aggregate demand. Consumer spending increases due to their ability to keep more of their after-tax income.

A balanced budget is when the government's spending and the taxes are equal. If a government is required to balance a budget and economy falls into recession; a period in a business cycle where there is a general decline in economic activities, prices go down and the economy becomes less active. The feasible policy the government should respond with is to cut spending equal to the reduction in tax revenue because the negative consequence of the recession is magnified, cutting spending equal to the reduction in the tax revenue will allow the government to balance the budget

batolisis batolisis · Answer 2 · 2020-03-13T17:43:33+01:00

Answer:

cut spending equal to the reduction in tax revenue
The negative consequence of the recession are magnified

Explanation:

Trying to balance the budget of a country by the Government when the economy of the country falls into recession is a very challenging time for the government agency responsible for balancing the budget of that country hence the government has to take measures so as to balance the effect of the recession on the economy.

one very effect measure is to cut spending equal to the reduction in tax revenue. the reduction in tax revenue is achieved by cutting taxes because of reduced economic activity during the period of recession and cutting spending by the government on not very important activities will also help balance the budget.

The consequence of this policy is that the negative consequence of recession will be magnified because less spending means less money in circulation.