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When the country is in a recession, which political party is more likely to want the...

  1. When the country is in a recession, which political party is more likely to want the federal government to undertake a massive program of construction and infrastructure-building projects to pump money into the economy and create jobs, and what specific economic theory is such action consistent with?

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Answer #1

When the country is in recession, the ruling party wants the federal government to undertake a massive program of construction and infrastructure builing projects to pump money into the economy and eliminate the recessionary gap and create jobs because this will help in increasing the level of aggregate demand in the economy and this inturn increases output in the economy and as production increases, demand for labor increases which increases employment and thus create jobs in the economy.

This economic policy is known as expansionary fiscal policy of the government and is consistent with the action of the government needed to eliminate recessionary gap in the economy.

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