If the government is required to balance the budget and the economy falls into a recession, which of the actions is a feasible policy response? cut spending equal to the reduction in tax revenue invest in infrastructure cut taxes to encourage consumer spending increase government spending to stimulate the economy What is a likely consequence of this policy? There is hyperinflation due to an increase in aggregate demand. The negative consequences of the recession are magnified. Consumer spending increases due to their ability to keep more of their after-tax income. Unemployment falls due to the economic stimulus