Recession
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The current recession the United States is experiencing began several years ago when business owners and CEO's were afraid that the sudden trend of bad business would continue, so they started to slow investments, put expansions on hold and reduce inventory. This had the effect of increasing unemployment and further reducing business. Workers started to get laid off, got less bonuses and overtime, and so began to spend less money. Because they saw businesses being hurt, consumers became wary and started buying less. All of these actions made the economy continue in a downward slide.
The role of fiscal policy is to counteract undesirable trends-- to push the economy out of recession and to slow it down if it becomes overheated and inflation occurs. If the economy is headed downward into a recession, fiscal policy is often used to stimulate the economy. This is what Keynes came up with in the midst of the Great Depression of the 1930's, when unemployment rates in the U.S. exceeded 25% and the growth rate of real GDP declined steadily for the next decade...