Which policy aims to increase spending and economic activity during periods of recession?

The policy that aims to increase spending and economic activity during periods of recession is expansionary policy. This approach is designed to stimulate the economy by encouraging higher levels of spending and investment. When the economy is in a downturn, expansionary policy often involves increasing government spending, cutting taxes, or lowering interest rates. These measures aim to boost consumer and business confidence, leading to increased consumption and investment which can help pull the economy out of recession.

Expansionary policy is particularly relevant during recessionary periods because it directly addresses the challenges of decreased demand and economic stagnation. By facilitating more money in circulation and encouraging expenditure, this policy can help create jobs, reduce unemployment, and support economic growth.

Other policies mentioned, such as contractionary policy, focus on reducing spending and tightening the money supply, which would not be suitable in a recession. Fiscal policy and monetary policy are broader terms that encompass various actions, but they can also include expansionary measures when the goal is to stimulate economic activity. However, the term that specifically refers to increasing economic activity during recessions is expansionary policy.