In 1946, when the employment Act was passed, economists and laymen alike believed that the avoidance of mass unemployment was the major economic problem facing the nation and that compensatory government spending or fiscal policy employment was the key instrument available to the government for this purpose. Monetary policy was regarded as having most a minor role to play in promoting the Acts objectives. These views were a product of the great depression and of the Keynesian revolution in economic thought. The great depression installed mass unemployment as the great threat and also was widely if erroneously interpreted as demonstrating the impotence of monetary policy. The keynesian revolution in economic thought offered an interpretation of the great depression that assigned a key role to investment spending and government spending. It also provided a sophisticated analysis purporting to show how fiscal policy could be used to promote a high and stable level of employment. The enthusiastic and largely uncritical acceptance of the Keynesian vision by the younger generation of economists as well as by some of the older generation produced great confidence in the capacity of fiscal policy, properly employed, to serve as a precision instrument that could prevent not only mass depressions but even minor reccessions.

Question: Taking into account the above case study, recommend appropriate fiscal policy actions to stimulate the economy after recession (25 marks)