Keynesian theory tells us that there are three approaches government can take to move an economy out of recession:
- Reduce interest rates
- Reduce taxes
- Increase government spending.
However, in practice these approaches may not work. For each approach, discuss:
1. How is it supposed to work ( i.e., its strengths as a policy tool).
2. Why it might not work (i.e.,its weaknesses as a policy tool).