What typically follows if a government implements significant fiscal stimulus during a recession?

When a government implements significant fiscal stimulus during a recession, an increase in economic growth typically follows. Fiscal stimulus, such as increased government spending or tax cuts, is designed to inject money into the economy, encouraging consumer spending and business investment. This enhanced demand for goods and services can help lift the economy out of recessionary conditions, thereby promoting economic growth.

During a recession, resources are often underutilized, and unemployment rates tend to increase due to reduced consumer demand. Fiscal stimulus aims to counteract this by providing the necessary boost to stimulate economic activity, which can lead to job creation and a reduction in unemployment over time as businesses respond to the uptick in demand.

Additionally, increasing government spending can have a multiplier effect, where initial spending leads to further economic activity as recipients of this spending (like workers and businesses) reinvest their income into the economy. This cycle fosters an environment conducive to growth, making it reasonable to expect that significant fiscal stimulus will result in an increase in economic growth in the wake of a recession.