Define fiscal policy and what should the government do with fiscal policy in order to pull the economy out of a recession.

Fiscal policy is defined as the set of economic policy that covers the expenditures and revenues of the government. This includes the policy of taxes as well as public expenditures taken by the government.

In the case when the economy is facing a recession, the government would opt for an expansionary fiscal policy wherein the rate of taxation would be reduced and the public expenditure would be increased so as to increase the consumption expenditures in the economy with a view to increasing the aggregate demand.