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When the economy is going through a very difficult time and consumption (consumer spending) is going down sharply, the Government very often will send out
When the economy is going through a very difficult time and consumption (consumer spending) is going down sharply, the Government very often will send out transfer payments (spending money) to the population, so that it can strengthen aggregate demand.
- One way to do it is to give everybody cash and let them spend and buy what they want.
- Another way to do it would be to give them food cards and gas cards that they can only spend on fuel and food; this might prevent people from using the cash on negative habits.
Both of these approaches have advantages or disadvantages. If you were in the government, which approach would you use and explain your answer.
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