Explanation:

What may a government do to rescue the economy from the phase of recession?
The usual remedies are given below:
•Direct and indirect taxes should be cut down, so that the consumers have higher disposable incomes (income after paying direct tax, i.e., income tax) on the one hand and the goods should become cheaper on the other hand, thus there is hope that the demand might pick up.
•The burden of direct taxes, especially the income tax, dividend tax, interest tax are slashed to enhance the disposable income (i.e, income after direct tax payment)—
•Salaries and wages should be revised by the government to encourage general spending by the consumers (as the Government of India implemented the recommendations of the fifth pay commission without much deliberation in 1996–97).
•Indirect taxes such as custom duty, excise duty (cenvat), sales tax, etc., should be cut down so that produced goods reach the market at cheaper prices.
•The government usually goes on to follow a cheap money supply policy by slashing down interest rates across the board and the lending procedure is also liberalized.
•Tax breaks are announced for new investments in the productive areas, etc.
Do you know?
•Recession is somewhat similar to the phase of ‘depression’ — we may call it a mild form of depression — fatal for economies as this may lead to depression if not handled with care and in time. The financial crises which followed the US ‘sub-prime crisis’ in almost the whole Euro-American economies has basically brought in ‘severe recessionary’ trends there.
THINK!
•Boom and Recovery
•Dear Money and Cheap Money