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Government Expenditures In Recession

From abandoned buildings to extravagant shopping malls the environment in which all people live and work is affected every day by the economic conditions of the time. While the most exciting of these times is often the times of growth and prosperity extra focus needs to be placed on the times when growth doesn’t come as easy. Times when the economy is slowing or there are even declines in production affect everyone and attention to the plans to move out of these slumps is especially important. People with differing ideals often approach this issue with different perspectives on how to escape the hard times and what role government should play. However when attempting to rebound from times of economic downturn it is important to ensure that government expenditures are not only increasing at an appropriate rate but are also focused on investment in infrastructure which will build a platform for competitive growth in the future.
As nations fall on hard times the first place most people look for help is from the government and the government is in a unique position which allows it to provided great help to the population. This unique position is based on the government’s ability to spend and distribute money without much concern over inflation, this tool for spending money is often referred to as fiscal policy. The government is able to do this because their actions do not have a significant impact on the demand or supply for money. Demand for money is defined by interest rates (Federal Funds Rate) which is controlled by the central bank (a bank which operates independently from the central government to control the value of money) and Supply is also controlled the central bank (the means by which is out of the scope of this paper). The money which the federal government spends is all of money which is collected in taxes and is part of the money supply in the country (therefore this money cannot change the supply of money in the country because it is already part of...