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Given this model of the economy: Y = C + I + G + (X-M), and assuming the following:
- We are at the early stages of a recession,
- There is political pressure to INCREASE the size of the public sector due to the prevalence of
the ideology that Big Government is helpful and government is trustworthy,
a. What government policy would you recommend?
b. Why?

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  • 1. Given this model of the economy: Y = C + I + G + (X-M), and assuming the following: - We are at the early stages of a recession, - There is political pressure to INCREASE the size of the public sector due to the prevalence of the ideology that Big Government is helpful and government is trustworthy, a. What government policy would you recommend? b. Why?