When consumers are very reluctant to spend in a recessionary environment, the government's most effective strategy is to

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When consumers are reluctant to spend, it means that demand in the economy is low. To boost demand, the government can increase its own spending through bond financing. This will create jobs and income, which will increase consumer confidence, raise consumption levels and eventually stimulate the economy. Decreasing taxes may not be effective as consumers may simply save the extra money, rather than spending it, and doing nothing may make the recession worse.

When Consumers Are Very Reluctant to Spend in a Recessionary