During economic recessions, governments often face pressure to cut spending in order to reduce budget deficits. However, I am curious about the broader economic implications of these spending cuts. Specifically, how do reductions in government expenditures affect overall economic growth during a recession? Are there specific sectors that are more vulnerable to these cuts, and how might they influence employment rates and consumer confidence? Additionally, what economic theories or empirical studies can help explain the potential effects of austerity measures on recovery trajectories? Understanding the balance between fiscal responsibility and the need for economic stimulus during downturns can provide insight into effective policy responses.
How do government spending cuts impact economic growth during periods of recession?
byu/Arianethecat inAskEconomics
Posted by Arianethecat