Federal government spending has a countercyclical impact that helps to stabilize the economy.

Question

Quizplus · Accepted Answer

When the economy is experiencing a downturn, federal government spending can help to increase demand and stimulate economic activity, thus stabilizing the economy. Conversely, during periods of economic growth, the government can decrease spending to prevent overheating and inflation. This countercyclical approach helps to smooth out economic fluctuations over time.

Federal Government Spending Has a Countercyclical Impact That Helps to Stabilize