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Recession Strategy

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Economic Recession is the general contraction and slowdown in economic activity that leads to the fall of GDP, Investment spending, business profits, employment, capacity utilization, inflation and household incomes but an increase in unemployment rates. One way to bring the economy out of recession is the full employment of the Keynesian economic theory.

Strategies to lead United States economy out of recession

Keynesian economics ideology asserts that the resolutions of the  private sector  occasionally  lead to ineffective macro-economic consequences and therefore, supports active public sector policy responses like monetary policy reactions by the central bank and effecting fiscal policy activities by the state to normalize the economy operations. The government of United States should consider increasing aggregate demand by offering stimulus packages to investors to sustain their production and maintain employment opportunities. This will improve economic activity in the country and help reduce unemployment in the short run leading to reduction of unemployment rates in the long run. During such times, the President of the United States should employ the expansionary monetary policy method as a short run measure to increase money supply in the market through government investments that will in turn create jobs, to help reduce the high unemployment rates and will ensure economy functions to equilibrium. The inducement of investment can be done through a reduction in interest rates and through increasing government investment in infrastructure including sourcing for cheap source of renewable energy to drive down the cost of production of goods in the industries in the long run. Increase in Investment by government is another policy that injects income into the economy. This results in increased spending in the general economy, which stimulates high production and investment.


The economic recession in the United States can be salvaged by the Keynesian model if the government offers a combination of economic stimulus to the investors to promote consistent production cycle and the use of expansionary monetary policies for a short run.  Increased investment will provide more full employment opportunities in the long run to return the economy functions to equilibrium.

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