Fiscal policy is important for helping the economy during hard times, like a recession. It does this by changing how much the government spends and how much it taxes people.

1. More Government Spending:

   • In 2020, the U.S. government spent about $3 trillion to help with the COVID-19 crisis. This helped create jobs and made people want to buy more things.
   • If the government increases its spending by just 1%, it can actually raise the country's overall economic activity (GDP) by $1.50 for every$1 spent.

2. Tax Cuts:

   • In 2008, the government gave back $168 billion in tax rebates through the Economic Stimulus Act. This made people spend more money.
   • When taxes are lowered, people have more money left over (disposable income) to spend or invest.

Using these strategies, fiscal policy can really help reduce the negative effects of economic downturns.