What Role Do Governments Play During Economic Downturns?
Governments play a critical role in mitigating the impacts of economic downturns through various measures:
1. Monetary Policy: Central banks may implement monetary policies such as reducing interest rates to stimulate borrowing and investment. 2. Fiscal Policy: Governments may introduce fiscal policies including stimulus packages, tax cuts, and increased public spending to boost economic activity. 3. Regulation: Implementing regulations to stabilize financial markets and protect consumers. 4. Support Programs: Offering support programs for businesses and individuals, such as unemployment benefits and business grants.