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Explain why government spending increases automatically when the economy goes into recession.

Explain why government spending increases automatically when the economy goes into recession.

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When the economy goes into recession it is primarily associated with lower household income which will lead to lower consumer spending and in turn lead to fall in real GDP. To stimulate the economy,expansionary fiscal policy is implemented to push aggregate demand curve to the right ,this can be done by increasing government spending. The government spending rises in recession because more people lose their jobs and they apply for government benefits, welfare benefits and other forms of income support.

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