The set back in the economy affects the government in a nation in more than one ways. The various outcomes of recession such as decline in stock markets, unemployment, layoffs and inflation crushes the economy in more than one ways. Government leaders of developed and undeveloped countries need to device suitable plans to pull the economy out of this mess. Some of the possible government responses during recession are discussed below:
Increase in the rate of unemployment is one main curse of an economic recession and government response for this is to generate more and more employment. Government tries to stop the increased rate of layoffs and keep people on their jobs, even in the least wages. This helps to maintain the essential household expenses and promotes a social stability in the country.
Another possible government response to the economic recession is bringing down the price of the oil and gas. The government may give corporate welfare to the gas and oil companies to keep their prices artificially low for the common man.
Government’s increased financial aid for education and health can have a positive impact on the vulnerable society of a country. It can considerably reduce the pressure on small children to leave their schools and join work. It can also greatly help the lower section of the society and those who are below the poverty line.
Some of the evident and appropriate actions to stabilize the economy can include increased aids such as school and college-based grants, fee relief, and financial funding in order to maintain the basic relief in health and education sectors.
The governmental agency that is most responsible for stabilizing and maintaining the recession in US, is the Federal Reserve Bank. In other nations, the response to economic recession comes from the respective central banks in those countries. The central banks have the power to take steps and give accurate responses to stabilize the economic recession.
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