Why might increases in government spending be ineffective during a recession?

Question

Quizplus · Accepted Answer

During a recession, increases in government spending may not be effective because recessions are often caused by a coordination problem related to the composition of aggregate demand, not just its level. In other words, it may not be enough to simply increase overall demand through government spending; the spending must be targeted to areas that will have the greatest impact on the economy. For example, if the recession is caused by a decrease in consumer spending, government spending that targets consumers (such as stimulus checks or tax cuts) may be more effective than spending that targets businesses or infrastructure.

Why Might Increases in Government Spending Be Ineffective During a Recession