Countercyclical policies

Countercyclical policies are government strategies used to stabilize the economy by acting opposite to current trends. During a recession, the government may increase spending or cut taxes to boost demand and stimulate growth. Conversely, in a boom, it might reduce spending or raise taxes to prevent overheating and inflation. These policies aim to smooth out economic fluctuations, helping maintain steady growth, stable employment, and controlled inflation. Essentially, they are tools to counteract the natural ups and downs of the economic cycle, promoting overall economic stability.